Should you subtract interest expense or dividends when calculating project cash flow?

Q: True or False In the net present value method, market research costs incurred in the past should be…

A: An investment appraisal depicts a financial analysis of a capital project that requires a huge…

Q: Explain why depreciation and interest should not be included as costs in a discounted cash flow…

A: The company makes several investments and an evaluation of investment is necessary. Therefore, the…

Q: Provide a general model for determining relevant cash flows associated withcapital investment…

A: A General model for determining relevant cash flows associated with capital investment projects.

Q: Identify if each of the following would be included or excluded in forecasting cash flows for a…

A: Cash flows forecasted include all the operating cash flows, capital expenditures and the changes in…

Q: Under the indirect method of estimating project cash flows, an increase in trade creditors in a…

A: Cash flow statement is divided into three activities i.e. cash flow from operating activities, cash…

Q: Which of the following should NOT be included as a cash flow in initial, operating or terminal cash…

A: There are various different costs associated while taking a capital budgeting decision.

Q: The length of time required for an investment to generate cash flows sufficient to recover its…

A: Net Present Value It is the amount of present value of the cash inflows net of cash outflows. It…

Q: Please provide examples of the cash inflows and outflows that may be considered when considering a…

A: The capital project is the project that helps in the improvement of various capital assets. It is…

Q: The Modified Internal Rate of Return (MIRR) is based on : Reinvestment rate, financing rate, and the…

A: MIRR is a discounting rate that compares the present value of future cash inflows to zero year…

Q: How can we easily automate the process of computing the net present worthof any project cash flow…

A: Net present value (NPV) is the contrast between the present value of money inflows over some…

Q: Is it always necessary to adjust projects’ cash flows when different projects haveunequal lives?…

A: EAA or Equivalent annual annuity is a methodology utilized in capital budgeting to pick between…

Q: What name is given to the time value of money technique that discounts the after-tax cash flows for…

A:

Q: which of the following should not be included in the cash flows for project analysis?…

A: Meaning of the given options: Opportunity cost : It is the benefit foregone from not selecting the…

Q: How can we determine after-tax cash flows for an investmenta project with only operating and…

A: Discount rate is the weighted average cost of capital (WACC) which is used in the project.  WACC is…

Q: Which of the following cash flows are not considered in the calculation of the annual cash-flow for…

A: Proceeds from selling an old asset which is being replaced by a new asset It does not impact the…

Q: Which of the following should NOT be included in the cash flows for project analysis? Opportunity…

A: Explanation of the given option: 1. opportunity cost : It is the cost to be borne for not choosing…

Q: Cash inflow from the project not cash flows

A: Solution:- Cash inflow each year from the project means the net flow of cash which we get each year…

Q: Differentiate between the Loan and Project Cash Flows?

A: Loan Cash Flows:   It refers to the borrowing of unsecured nature that is used by small businesses…

Q: What are the effects of Borrowing on Project Cash Flows?

A: Cash flows are the cash generated from the operation of the business organisation. In other words,…

Q: Cash flows, rather than accounting profits, are used in project analysis. Whatis the basis for this…

A: The term cash flows refer to cash & cash equivalents that is being transferred in & out of…

Q: Why are interest charges not deducted when a project’s cash flows are calculated for use in a…

A: Capital budgeting analysis is useful to know which projects are profitable and which are not. There…

Q: How is depreciation treated in the indirect method of estimating project cash flows? O Include the…

A: Under the indirect method of estimating project cash flows, adjustment of calculating cash flows…

Q: Discuss the principal limitations of the cash payback method for evaluating capital investment…

A: Cash Payback method:- it is a method which the accountant uses to calculate the different capital…

Q: In a single sentence, explain how you can determine which cash flows should be included in the…

A: Single sentence: Cash flows that will only occur if the project is accepted should be included in…

Q: Explain Loan versus Project Cash Flows?

A: Accounting:   Accounting is a system, or a process of collecting and organizing economic…

Q: What is the procedure of developing Project Cash Flow Statements?

A: Cash flow is the amount of liquid cash that flows in and out of the company in a particular…

Q: How can we determine the project cash flows in the absence of inflation?

A: Project Cash Flows are the Net cash flows of the project i.e. Sources of cash less uses of cash. The…

Q: Why should companies use a project’s free cash flows rather than accountingincome when determining a…

A: Capital budgeting analysis is useful to know which projects are profitable and which are not. There…

Q: Identify “relevant” cash flows that should and should not be included in a capital budgeting…

A: Before investing in new projects or assets, profitability of the project is evaluated by using…

Q: State a method that translates a project's cash flows into an equivalent net present value?

A: Both investment and finance decisions are made with the primary purpose of increasing shareholder…

Q: Is after-tax cashflow still the cash inflow even if it is the sum of NOPAT and depreciation in the…

A: Cash Inflow of Project: The amount of money that enters a firm is referred to as cash influx. Sales,…

Q: A financial analyst should include interest and dividend payments when calculating a project's…

A: Operating cash flows are those cash flows that relate to the company's main business activities.

Q: Explain project net cash flows

A: A project generally has cash outflow and then a series of cash inflows. The excess of cash inflows…

Q: How do we develop the project cash flows, after taxes, over the life of the project?

A: Cash flows of the project include both cash inflows and cash outflows. To develop cash flows…

Q: Explain how sunk costs and cannibalisation affect the determination of an investment’s incremental…

A: Introduction : . Simply put, sunk costs refers to the costs that has already been incurred and the…

Q: Explain project cash flows

A: Project cash flow is a dynamic process, in which the money moves into and out of the business. Its…

Q: List some common cash outflows from capital investments.

A: Cash outflows from capital investments: 1) Purchase of Land, Buildings, Plant,vehicles etc. There is…

Q: How can we develop the cash flow series over the project life based on the assumption of most likely…

A: Below is the cash flow developed on the base of assumption:

Q: Should interest expenses and dividend be included as an incremental cash flow in capital budgeting…

A: Incremental cash flow Incremental cash flow is the extra cash flow that a company generates by…

Q: Why should companies use a project’s cash flows rather thanaccounting income when determining a…

A: Net Present Value is the difference between the current value of cash inflow and cash outflow for a…

Q: Which of the following statements is true with regard to cash flows resulting from financing costs?…

A: Financing cost: In the context of borrowing money, financing costs are defined as the interest and…

Q: h expense

A: Depreciation definition : In simple words, depreciation refers to the expense of an organisation…