Incremental cash flows refer to: 1 point the difference between profit after tax and profit before tax the additional cash flows that will be generated if the project undertaken the cash flows of the project, minus interest charges on financing the cash flow that are forgone if a firm not undertake the project Which of the following statements regarding NPV is true * 1 point if NPV is positive, the project is expected to earn more than the firm's cost of capital accepting negative NPV projects will reduce shareholders wealth if the NPV is positive, the project's cost is less than the project's expected benefit All of the above 1 point Arguments against net present value and internal rate of return methods include * they fail to use accounting profits they require detailed forecast of incremental benefit and cost throughout projects' life they fail to consider how the investment of the project is financed they require to use cash flows instead of accounting profit the cost of 1 point If the NPV of a project is zero, the project's IRR capital. must be less than must be greater than must be equal is less or greater than If all other things are held constant, the NPV of a typical investment project point decreases when: * the rate of cost of capital decreases the initial cost of a project decreases each cash flow is delayed by one year the sales revenue in incremental cash flow increases