Incremental cash flows from a project =
A) Firm cash flows without the project plus or minus changes in net income.
B) Firm cash flows with the project plus firm cash flows without the project.
C) Firm cash flows with the project minus firm cash flows without the project.
D) Firm cash flows without the project plus or minus changes in revenue with the project.
Which of the following is NOT one of the categories for a project's relevant after-tax cash flows?
A) Financing flows
B) Initial cash outflow
C) Differential flows over the project's life
D) Terminal cash flow
Which of the following is NOT part of a project's initial cash outflow?
A) The asset's purchase price
B) Funds committed to support increased inventory levels due to expected increased sales if the firm adopts the project
C) A marketing survey completed last year to determine the project's feasibility
D) Expenses incurred to install the asset
Relevant incremental cash flows include
A) sales captured from the firm's competitors.
B) retained sales that would have been lost to new competing products.
C) incremental sales brought to the firm as a whole.
D) all of the above.
Which of the following is NOT considered in the calculation of incremental cash flows?
A) Depreciation tax shield
B) Sunk costs
C) Opportunity costs
D) Both A and B
Which of the following cash flows should be included as incremental costs when evaluating capital projects?
A) Investment in working capital that is directly related to a project
B) Expenses that are incurred in order to modify a firm's production facility in order to invest in a project
C) Opportunity costs that are directly related to a project
D) All of the above
Depreciation expenses affect tax-related cash flows by
A) increasing taxable income, thus increasing taxes.
B) decreasing taxable income, thus reducing taxes.
C) decreasing taxable income, but not altering cash flows since depreciation is not a cash expense.
D) all of the above.
