Fundamentals of Financial Management Concise
Quiz 12: Cash Flow Estimation and Risk Analysis
The Change in Net Operating Working Capital Associated with New
The change in net operating working capital associated with new projects is always positive,because new projects mean that more operating working capital will be required.
Explore answers and all related questions
The use of accelerated versus straight-line depreciation causes net income reported to stockholders to be lower,and cash flows higher,during every year of a project's life,other things held constant.
Sensitivity analysis measures a project's stand-alone risk by showing how much the project's NPV (or IRR)is affected by a small change in one of the input variables,say sales.Other things held constant,with the size of the independent variable graphed on the horizontal axis and the NPV on the vertical axis,the steeper the graph of the relationship line,the more risky the project,other things held constant.
Which of the following is NOT a relevant cash flow and thus should NOT be reflected in the analysis of a capital budgeting project? A) Changes in net operating working capital. B) Shipping and installation costs for machinery acquired. C) Cannibalization effects. D) Opportunity costs. E) Sunk costs that have been expensed for tax purposes.
Explore all questions
How it work
Terms And Conditions
© 2020 QuizPlus. All Right Reserved