operating cash flows of a project: includes tax. none of the others is correct are equal to the project's total projected net income. decrease when net working capital increases. are unaffected by the depreciation method selected.

operating cash flows of a project: includes tax. none of the others is correct are equal to the project's total projected net income. decrease when net working capital increases. are unaffected by the depreciation method selected.

Essentials Of Investments

11th Edition

ISBN:9781260013924

Author:Bodie, Zvi, Kane, Alex, MARCUS, Alan J.

Publisher:Bodie, Zvi, Kane, Alex, MARCUS, Alan J.

Chapter1: Investments: Background And Issues

Section: Chapter Questions

Problem 1PS

See similar textbooks

Related questions

Q: True or False In the net present value method, market research costs incurred in the past should be…

A: An investment appraisal depicts a financial analysis of a capital project that requires a huge…

Q: Assume that both Projects A and B have normal cash flows, with one outflow followed by a series of…

A: IRR(Internal ROR) is the rate at which NPV(Net Present Value) of a project is zero. At IRR, PV of…

Q: How can we determine the period necessary to recover both the capitalinvestment and the cost of…

A: The Payback period (PBP) determines how long it would take a company to recover the investment. PBP…

Q: When calculating free cash flows, which of the following statements is NOT true regarding the…

A: Depreciation refers to the decrease in the value of an asset over time as a result of wear and tear,…

Q: What are the four types of cash flows MOST common in a capital budgeting valuation? Group of answer…

A: The four types of cash flows most common in a capital budgeting valuation are:A) Capital…

Q: True or False: If a project involves buying an asset, and if the company uses “accelerated…

A: Depreciation is the reduction in the value of asset over its estimated useful life. Various methods…

Q: Which of the following cash flows should be excluded from a net present value evaluation of an…

A: NPV can be calculated by subtracting present value of cash inflow from present value of cash…

Q: Cash outflows generated by capital investments include all of the following except:…

A: Cash flow generated by capital investment includes that is cash flow generated by all activities.

Q: To get a project's after-tax cash flow, you must subtract depreciation as though it is an expense…

A: The difference between a company's cash inflows and outflows over time is its net cash flow. It is a…

Q: A project is rejected under the net present value method when: a. The percentage return is greater…

A: Capital budgeting is a process used to gauge if an investment should be made in a particular project…

Q: Which of the following is a criterion for a capital expenditure? a.It should increase the…

A: Capital Expenditure: It is the amount that a company spends on the development of machinery,…

Q: Which of the following items is irrelevant in determining the relevant cost of acquisition in…

A: Capital budgeting: capital budgeting is a decision making method done by management accountants in…

Q: When converting accounting profits to cash flows, we broadly deal with depreciation and working…

A: cash flow Statement: An organization's total cash inflows from current activities and outside…

Q: How can we determine after-tax cash flows for an investmenta project with only operating and…

A: Discount rate is the weighted average cost of capital (WACC) which is used in the project. WACC is…

Q: Which of the following should NOT be included in the cash flows for project analysis? Opportunity…

A: Explanation of the given option: 1. opportunity cost : It is the cost to be borne for not choosing…

Q: When evaluating a potential capital budgeting decision, fixed asset expenditures O should be…

A: Capital budgeting is financial technique which helps in decision making on the basis of future cash…

Q: If the cash flows of one project are adversely impacted by the acceptance of another project, then…

A: Two projects are said to be mutually exclusive when the acceptance of cash flows from one of them…

Q: I answered true but why answer say false please provide reason why

A: Part 2:Explanation:Step 1: Understand the role of depreciation in capital budgeting analysis.…

Q: The payback period has the following weaknesses as decision criterion for capital projects: Uses…

A: Answer:- Payback period meaning:- Payback period is the amount of time generally required to…

Q: Adjusted present value technique is a technique that A) adjusts conventional present value for…

A: Adjusted present value technique is very common method used in the valuation of stock and companies…

Q: Residual income is the excess of operating income over the cost of capitalassociated with the…

A: Residual income is the excess of operating income over the cost of capital associated with the…

Q: Assuming that there are no income taxes, which of the following is correct concerning depreciation?…

A: Depreciation is reduction in value of asset due to wear and tear of asset with the passage of time…

Q: The gross income multiplier (GIM) is a great method to value small scale and simple commercial…

A: GIM method is an approximate and rough method of valuation of the property based on the income from…

Q: 1.True or flase . Even thugh thr amounts and timing of the cash flow may differ, the appropiate LCM…

A: ''Since you have asked for multiple question, we will solve the first question for you. If you want…

Q: Over the life of a project, a project’s accounting earnings equal to its net cash flows Group of…

A: Project's accounting earnings can differ from its net cash flows during the life of the project…

Q: The internal rate of return is the: discount rate that makes present value of cash inflows equal to…

A: The internal rate of return (IRR) is a capital budgeting metric used to gauge the benefit of…

Q: Changes in net operating working capital can be excluded from a project's cash flows because the…

A: Changes in net operating working capital can be excluded from a project's cash flows because the…

Question

The operating cash flows of a project:

includes tax.

none of the others is correct

are equal to the project's total projected net income.

decrease when net working capital increases.

are unaffected by the depreciation method selected.

Definition Video Definition Accounting method wherein the cost of a tangible asset is spread over the asset's useful life. Depreciation usually denotes how much of the asset's value has been used up and is usually considered an operating expense. Depreciation occurs through normal wear and tear, obsolescence, accidents, etc. Video

Expert Solution

This question has been solved!

Explore an expertly crafted, step-by-step solution for a thorough understanding of key concepts.

This is a popular solution!

SEE SOLUTION Check out a sample Q&A here

Step 1: Definition of operating cash flow

VIEW

Step 2: Explanation

VIEW

Solution

VIEW

Trending now

This is a popular solution!

Step by step

Solved in 3 steps

SEE SOLUTION Check out a sample Q&A here

Similar questions

Which of the following best describes the process of capital budgeting? a Forecasting revenues and expenses hmiting funds for capital improvements without considering the profitability of proposed prot determining a companys short term goals d. determinung the amount to spend on fixed assets and which fixed assets to purchase
In the estimation of incremental cash flows for a new project, several costs and issues are considered. In reference to the lecture materials for cash flow estimation, list the seven important issues to be kept track of in estimating incremental cash flows for expansion, replacement, or new capital projects. [No explanation is required for this part.]
A characteristic of the payback method is that it: (See your Chapter 25 notes, page 9) Uses accrual accounting inflows in the numerator of the calculation Uses the estimated expected useful life of the asset in the denominator of the calculation Incorporates cash flows received after the payback period has been reached Is based on accounting income Incorporates the time value of money Ignores total project profitability
For a capital investment project to be acceptable, it must generate a rate of return A) Less than the required rate of returnB) Equal to or greater than the cost of capitalC) equal to the initial investmentD) none of the above
Which of the following statements is FALSE? A. When evaluating a capital budgeting decision, we generally include interest expense. B. Only include as incremental expenses in your capital budgeting analysis the additional overhead expenses that arise because of the decision to take on the project. C. Many projects use a resource that the company already owns. O D. As a practical matter, to derive the forecasted cash flows of a project, financial managers often begin by forecasting earnings.
How do we develop the project cash flows, after taxes, over the life of the project?
Hi, number 3 still appears to be unanswered for this problem. How do you determine relevant cash flow (after-tax) at project disposal (termination)?
Which of the following statements is true regarding the payback period? Multiple Choice It measures the length of time that it takes for a project to recover its initial cost from the discounted net cash inflows that it genera It measures the length of time that it takes for a project to recover its initial cost from the net cash inflows that it generates. It measures the length of time that it takes for a project to recover its initial cost from the incremental net operating income that It measures the length of time that it takes for a project to recover its initial cost from the discounted incremental net operating it generates.
13.Concerning incremental project cash flow, this is a cost one would never count as a cash flow of the project. A. taxes paid B. financing costs C. initial investment D. operating expenses of the project
In determining the value in use, which of the following cash flow is excluded from the computation? I. Income tax receipts or payments. II. Net cash flows received or paid on the disposal of the asset at the end of its useful life in an arm's length transaction which is after using the asset. III. Future costs of improving or enhancing the asset's performance.
Why is the depreciation tax shield a component of analyzing investment decisions? O A. Depreciation causes a cash outflow that is added to determine net income. O B. Though no cash was paid out, depreciation was included on the tax return, which caused the company to pay taxes on the amount of depreciation. O C. Depreciation lowers cash outflows for income taxes paid. O D. Depreciation creates cash flows that do not appear on the income statement.
Incremental cash flows: a. refer to only cash flows which occur at the end of a project b. are cash flows which change if you proceed with the project c. refer to only cash flows which occur at the start of a project d. are never included in capital budgeting analysis e. refer to the existing cash flows of the business

Recommended textbooks for you

Essentials Of Investments

Finance

ISBN:

9781260013924

Author:

Bodie, Zvi, Kane, Alex, MARCUS, Alan J.

Publisher:

Mcgraw-hill Education,

FUNDAMENTALS OF CORPORATE FINANCE

Finance

ISBN:

9781260013962

Author:

BREALEY

Publisher:

RENT MCG

Financial Management: Theory & Practice

Finance

ISBN:

9781337909730

Author:

Brigham

Publisher:

Cengage

Foundations Of Finance

Finance

ISBN:

9780134897264

Author:

KEOWN, Arthur J., Martin, John D., PETTY, J. William

Publisher:

Pearson,

Fundamentals of Financial Management (MindTap Cou…

Finance

ISBN:

9781337395250

Author:

Eugene F. Brigham, Joel F. Houston

Publisher:

Cengage Learning

Corporate Finance (The Mcgraw-hill/Irwin Series i…

Finance

ISBN:

9780077861759

Author:

Stephen A. Ross Franco Modigliani Professor of Financial Economics Professor, Randolph W Westerfield Robert R. Dockson Deans Chair in Bus. Admin., Jeffrey Jaffe, Bradford D Jordan Professor

Publisher:

McGraw-Hill Education

Essentials Of Investments

Finance

ISBN:

9781260013924

Author:

Bodie, Zvi, Kane, Alex, MARCUS, Alan J.

Publisher:

Mcgraw-hill Education,

FUNDAMENTALS OF CORPORATE FINANCE

Finance

ISBN:

9781260013962

Author:

BREALEY

Publisher:

RENT MCG

Financial Management: Theory & Practice

Finance

ISBN:

9781337909730

Author:

Brigham

Publisher:

Cengage

Foundations Of Finance

Finance

ISBN:

9780134897264

Author:

KEOWN, Arthur J., Martin, John D., PETTY, J. William

Publisher:

Pearson,

Fundamentals of Financial Management (MindTap Cou…

Finance

ISBN:

9781337395250

Author:

Eugene F. Brigham, Joel F. Houston

Publisher:

Cengage Learning

Corporate Finance (The Mcgraw-hill/Irwin Series i…

Finance

ISBN:

9780077861759

Author:

Stephen A. Ross Franco Modigliani Professor of Financial Economics Professor, Randolph W Westerfield Robert R. Dockson Deans Chair in Bus. Admin., Jeffrey Jaffe, Bradford D Jordan Professor

Publisher:

McGraw-Hill Education

SEE MORE TEXTBOOKS