Three: Cash Flow Management (Pages 86-101) ree Cash Flow Supplements: Part One and Part Two al Appendix 3A: Depreciation ntal Appendix 3B: Inflation in Capital Budgeting Supplemental Appendix 3C: Analyzing Foreign Investments Chapter One: Equivalent Annual Cost (Pages 35-36) Chapter One Supplement: Capital Rationing and Replacement Chain Analysis A. TRUE/FALSE QUESTIONS Enter "True" or "False" on the blank preceding each question. T 1. The key focus in capital budgeting analysis is pre-tax cash flows, as tax rates vary b T 2. Cash which a firm holds for the "precautionary motive," is held to meet unforeseen. contingencies or unexpected disbursements. H4 T 3. "Cash flow" refers to funds which a firm receives or pays out. 4. When estimating the cash flows for a particular project, it is important to include a sunk corporate overhead costs in the annual project cash flow calculations. 5. In a "replacement project" situation, the investment cost associated with a new ma by the money received from the sale of the