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QUESTION 6: (10) In capital budgeting analysis, why do we focus on cash flow rather than accounting profit? [2] Should the costs of evaluating a
QUESTION 6: (10)
- In capital budgeting analysis, why do we focus on cash flow rather than accounting profit? [2]
- Should the costs of evaluating a project be included as a portion of the projects cost? [2]
- Is the ability to use money allocated to a project for another purpose an example of a sunk cost? [2]
- Explain how depreciation creates a cash inflow even though there is no cash inflow or outflow associated with the depreciation deductions themselves. [2]
- Is a negative change in net working capital a problem (assuming profitability and sales are maintained)? [2]
QUESTION 6: (10)
- In capital budgeting analysis, why do we focus on cash flow rather than accounting profit? [2]
- Should the costs of evaluating a project be included as a portion of the projects cost? [2]
- Is the ability to use money allocated to a project for another purpose an example of a sunk cost? [2]
- Explain how depreciation creates a cash inflow even though there is no cash inflow or outflow associated with the depreciation deductions themselves. [2]
- Is a negative change in net working capital a problem (assuming profitability and sales are maintained)? [2]
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Analysis for Financial Management
Authors: Robert C. Higgins
12th edition
1259918963, 9781260140729 , 978-1259918964
