QUESTION 31 Which of the following statements is CORRECT? a. Only incremental cash lows are relevant in pro ect an ysis, the proper incremental cash nows are the reported accounting pro ts, and thus reported accounting income should be used as the basis for investor and managerial decisions O b. It an asset is sold for less than its book value at the end of a project's life, it will generate a loss for the firm, and the associated O c. None of the other responses are correct. Od.Discounted Cash Flow techniques (such as the capital budgeting techniques studied in this chapter) were originally developed to value Oe. It is unrealistic to believe that any investment in working capital required at the start of a project can be recovered at the project's project's terminal cash flow will always be negative. passive investments. However, capital budgeting projects are not passive investments--managers can often take actions after the investment has been made that alter the cash flow stream. Opportunities for such actions are called real options. completion. Thus, cash flows associated with working capital should be included only at the start of a project's life (Year O)