Whether the project is based on the relevant cash flow or increamental cash flow. Introduction: The relevant cash flow comes under the incremental cash flow that is helpful in a projects decision making. Thus, a variation in the total future cash flow of a firm that is from the direct outcome of the decision to obtain a project is the relevant cash flow.

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Answer 1

Question

Chapter 10, Problem 10.1CTF

Summary Introduction

To determine: Whether the project is based on the relevant cash flow or increamental cash flow.

Introduction:

The relevant cash flow comes under the incremental cash flow that is helpful in a projects decision making. Thus, a variation in the total future cash flow of a firm that is from the direct outcome of the decision to obtain a project is the relevant cash flow.

Expert Solution & Answer

Answer to Problem 10.1CTF

The project analysis that is based on the relevant cash flow of the project is referred to as the stand-alone principle.

Explanation of Solution

Incremental cash flows:

The incremental cash flow is the differentiation among the future cash flow with a project and a future cash flow without a project. As the relevant cash flows are stated as the increments to, the changes in, the present cash flow of the firm, they are referred to as the incremental cash flow that are connected with the projects.

The stand-alone principle is a guess, that the analysis of the project may be based on the relevant cash flow or the incremental cash flow of the project. The stand-alone principle mainly states that once the firm finds the incremental cash flow from the project, then the firm can view the project as a type of “minifirm”.

Hence, the stand-alone principle analysis the project based on the relevant cash flow of the project.

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Students have asked these similar questions

Esfandairi Enterprises is considering a new three-year expansion project that requires an initial fixed asset investment of $2,350,000. The fixed asset will be depreciated straight-line to zero over its three-year tax life, after which time it will be worthless. The project is estimated to generate $3,310,000 in annual sales, with costs of $2,330,000. Assume the tax rate is 23 percent and the required return on the project is 11 percent. What is the project's NPV? Note: A negative answer should be indicated by a minus sign. Do not round intermediate calculations and round your answer to 2 decimal places, e.g., 32.16.

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Answer 2

Question

Chapter 10, Problem 10.1CTF

Summary Introduction

To determine: Whether the project is based on the relevant cash flow or increamental cash flow.

Introduction:

The relevant cash flow comes under the incremental cash flow that is helpful in a projects decision making. Thus, a variation in the total future cash flow of a firm that is from the direct outcome of the decision to obtain a project is the relevant cash flow.

Expert Solution & Answer

Answer to Problem 10.1CTF

The project analysis that is based on the relevant cash flow of the project is referred to as the stand-alone principle.

Explanation of Solution

Incremental cash flows:

The incremental cash flow is the differentiation among the future cash flow with a project and a future cash flow without a project. As the relevant cash flows are stated as the increments to, the changes in, the present cash flow of the firm, they are referred to as the incremental cash flow that are connected with the projects.

The stand-alone principle is a guess, that the analysis of the project may be based on the relevant cash flow or the incremental cash flow of the project. The stand-alone principle mainly states that once the firm finds the incremental cash flow from the project, then the firm can view the project as a type of “minifirm”.

Hence, the stand-alone principle analysis the project based on the relevant cash flow of the project.

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Answer 3

Question

Chapter 10, Problem 10.1CTF

Summary Introduction

To determine: Whether the project is based on the relevant cash flow or increamental cash flow.

Introduction:

The relevant cash flow comes under the incremental cash flow that is helpful in a projects decision making. Thus, a variation in the total future cash flow of a firm that is from the direct outcome of the decision to obtain a project is the relevant cash flow.

Expert Solution & Answer

Answer to Problem 10.1CTF

The project analysis that is based on the relevant cash flow of the project is referred to as the stand-alone principle.

Explanation of Solution

Incremental cash flows:

The incremental cash flow is the differentiation among the future cash flow with a project and a future cash flow without a project. As the relevant cash flows are stated as the increments to, the changes in, the present cash flow of the firm, they are referred to as the incremental cash flow that are connected with the projects.

The stand-alone principle is a guess, that the analysis of the project may be based on the relevant cash flow or the incremental cash flow of the project. The stand-alone principle mainly states that once the firm finds the incremental cash flow from the project, then the firm can view the project as a type of “minifirm”.

Hence, the stand-alone principle analysis the project based on the relevant cash flow of the project.

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Answer 4

Question

Chapter 10, Problem 10.1CTF

Summary Introduction

To determine: Whether the project is based on the relevant cash flow or increamental cash flow.

Introduction:

The relevant cash flow comes under the incremental cash flow that is helpful in a projects decision making. Thus, a variation in the total future cash flow of a firm that is from the direct outcome of the decision to obtain a project is the relevant cash flow.

Expert Solution & Answer

Answer to Problem 10.1CTF

The project analysis that is based on the relevant cash flow of the project is referred to as the stand-alone principle.

Explanation of Solution

Incremental cash flows:

The incremental cash flow is the differentiation among the future cash flow with a project and a future cash flow without a project. As the relevant cash flows are stated as the increments to, the changes in, the present cash flow of the firm, they are referred to as the incremental cash flow that are connected with the projects.

The stand-alone principle is a guess, that the analysis of the project may be based on the relevant cash flow or the incremental cash flow of the project. The stand-alone principle mainly states that once the firm finds the incremental cash flow from the project, then the firm can view the project as a type of “minifirm”.

Hence, the stand-alone principle analysis the project based on the relevant cash flow of the project.

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Subscribe now to access step-by-step solutions to millions of textbook problems written by subject matter experts!

Answer 5

Chapter 10, Problem 10.1CTF

Summary Introduction

To determine: Whether the project is based on the relevant cash flow or increamental cash flow.

Introduction:

The relevant cash flow comes under the incremental cash flow that is helpful in a projects decision making. Thus, a variation in the total future cash flow of a firm that is from the direct outcome of the decision to obtain a project is the relevant cash flow.

Expert Solution & Answer

Answer to Problem 10.1CTF

The project analysis that is based on the relevant cash flow of the project is referred to as the stand-alone principle.

Explanation of Solution

Incremental cash flows:

The incremental cash flow is the differentiation among the future cash flow with a project and a future cash flow without a project. As the relevant cash flows are stated as the increments to, the changes in, the present cash flow of the firm, they are referred to as the incremental cash flow that are connected with the projects.

The stand-alone principle is a guess, that the analysis of the project may be based on the relevant cash flow or the incremental cash flow of the project. The stand-alone principle mainly states that once the firm finds the incremental cash flow from the project, then the firm can view the project as a type of “minifirm”.

Hence, the stand-alone principle analysis the project based on the relevant cash flow of the project.

Answer 6

Chapter 10, Problem 10.1CTF

Summary Introduction

To determine: Whether the project is based on the relevant cash flow or increamental cash flow.

Introduction:

The relevant cash flow comes under the incremental cash flow that is helpful in a projects decision making. Thus, a variation in the total future cash flow of a firm that is from the direct outcome of the decision to obtain a project is the relevant cash flow.

Expert Solution & Answer

Answer to Problem 10.1CTF

The project analysis that is based on the relevant cash flow of the project is referred to as the stand-alone principle.

Explanation of Solution

Incremental cash flows:

The incremental cash flow is the differentiation among the future cash flow with a project and a future cash flow without a project. As the relevant cash flows are stated as the increments to, the changes in, the present cash flow of the firm, they are referred to as the incremental cash flow that are connected with the projects.

The stand-alone principle is a guess, that the analysis of the project may be based on the relevant cash flow or the incremental cash flow of the project. The stand-alone principle mainly states that once the firm finds the incremental cash flow from the project, then the firm can view the project as a type of “minifirm”.

Hence, the stand-alone principle analysis the project based on the relevant cash flow of the project.

Answer 7

Chapter 10, Problem 10.1CTF

Summary Introduction

To determine: Whether the project is based on the relevant cash flow or increamental cash flow.

Introduction:

The relevant cash flow comes under the incremental cash flow that is helpful in a projects decision making. Thus, a variation in the total future cash flow of a firm that is from the direct outcome of the decision to obtain a project is the relevant cash flow.

Answer 8

Expert Solution & Answer

Answer to Problem 10.1CTF

The project analysis that is based on the relevant cash flow of the project is referred to as the stand-alone principle.

Answer 9

Expert Solution & Answer

Answer 10

Expert Solution & Answer

Answer 11

Explanation of Solution

Incremental cash flows:

The incremental cash flow is the differentiation among the future cash flow with a project and a future cash flow without a project. As the relevant cash flows are stated as the increments to, the changes in, the present cash flow of the firm, they are referred to as the incremental cash flow that are connected with the projects.

The stand-alone principle is a guess, that the analysis of the project may be based on the relevant cash flow or the incremental cash flow of the project. The stand-alone principle mainly states that once the firm finds the incremental cash flow from the project, then the firm can view the project as a type of “minifirm”.

Hence, the stand-alone principle analysis the project based on the relevant cash flow of the project.

Answer 12

Ch. 10.1 - What are the relevant incremental cash flows for...Ch. 10.1 - What is the stand-alone principle?Ch. 10.2 - Prob. 10.2ACQ Ch. 10.2 - Prob. 10.2BCQ Ch. 10.2 - Explain why interest paid is not a relevant cash...Ch. 10.3 - What is the definition of project operating cash...Ch. 10.3 - For the shark attractant project, why did we add...Ch. 10.4 - Prob. 10.4ACQ Ch. 10.4 - How is depreciation calculated for fixed assets...Ch. 10.5 - Prob. 10.5ACQ

Concept explainers

Answer to Problem 10.1CTF

Explanation of Solution

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