When evaluating a capital project, estimating \"incremental after-tax cash flows

Question

When evaluating a capital project, estimating "incremental after-tax cash flows" is the most important, and most difficult, part of the financial analysis. "Incremental after-tax cash flows" can be classified into three (3) general categories. Which of the following is not one of the 3 categories? A. Initial Investment Outlay/Expense/Cost+Shipping/Handling/Installation Costs B. Net Present Valu C. Operating Cash Flows over the project's expected life D. Terminal Value (salvage value and cash flows in the last year of the project's life & beyond) . e (NPV)-the single most important factor to consider when evaluating projects

Explanation / Answer

Answer is option B.

This is not an incremental cash flow, it is a technique to evaluate the incremental cash flows.

The rest of the options are the incremental cash flows.

By using the incremental cash flows arrived by way of initial investment, operating cash flows and terminal values NPV is calculated.

Related Questions

Navigate

• Browse (All)
• Browse W
• Subjects

---

---

Integrity-first tutoring: explanations and feedback only — we do not complete graded work. Learn more.