Financial Management: Theory & Practice
Financial Management: Theory & Practice
16th Edition
ISBN: 9781337909730
Author: Brigham
Publisher: Cengage
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Chapter 11, Problem 2Q
Summary Introduction

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Cash can be used up or invest again, and as accounting proceeds does not stand for cash, they are of fewer basic significance than cash flows for analysis of investment. Recollect that in the chapters of stock valuation concentrated on free cash flows and dividends, which stand for cash flows, moderately than on earnings per share, which stand for accounting proceeds.

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Students have asked these similar questions
Cash flows, rather than accounting profits, are used in project analysis. Whatis the basis for this emphasis on cash flows as opposed to net income?
Why should companies use a project’s cash flows rather thanaccounting income when determining a project’s NPV?
Which of the following statements is true with regard to cash flows resulting from financing costs? a. They should be included in the cash flow calculations. b. Financing cash flows cannot include dividend payments to stockholders and interest payments to bondholders. c. Financing costs are captured in the original investment of a project’s cash flows. d. If cash outflows associated with financing costs were deducted from the cash flows for a project, it would be double-counting the financing costs of the investment.

Chapter 11 Solutions

Financial Management: Theory & Practice

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