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?

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: How can we prepare a project's cash flow statement?

A: Cash flow statement of a project means summarised view of all cash inflows and cash outflows of the…

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: In construction of a capital budget, depreciation is used to compute cash flows.   However,…

A: Introduction: Depreciation is a firm’s tax deductible cost. It is each year that the capital asset…

Q: The relationship between project cash flows, taxes and inflation.

A: Cash flows is the flow of money in or out from the business. There are two types of cash flows which…

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 one of these cash flow measures has been reduced by additions to PP&E (which are called…

A: Property, plant and equipment(PPE) is a capital expenditure, it cause outflow of funds.

Q: Why does capital budgeting rely on the analysis of cash flows rather than on net income

A: Capital budgeting : Capital project is a major expenditure that’s required to purchase a machinery…

Q: Cash surplus and economic assumptions are components of a financial planning model. True or False

A: Future is uncertain and it contains various risk factors. Financial planning (FP) model is used to…

Q: Why might the riskiness of cash flow from the residual value of the real estate differ from the…

A: It is nothing but the salvage value or scrap value of an asset. It speaks to the measure of…

Q: Explain the objective of the cash flow statement and why it is required.

A: A cash flow statement is a basic financial report that depicts a company's cash inflows (cash…

Q: Explain why, when utilizing the indirect method, depreciation expenditure, depletion expense, and…

A: Here is the Answer

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: Would research and development and marketing be working capital? Can we take operating profit and…

A: Hello. Since your question has multiple parts, we will solve the first question for you. If you want…

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: what are the major advantages of the indirect method of reporting cash flow from operating…

A:

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 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: What is the difference between the direct method and the indirect method of presenting the cash flow…

A: Statement of cash flows: Statement of cash flow is a financial statement that shows the cash and…

Q: What would be a business example that shows how depreciation and accelerated depreciation can affect…

A: Depreciation- is a method used by a business or company to write off an asset's value over it's…

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 is the process of Developing Project Cash Flow Statements?

A: The cash flow statement for the Project is required to keep check the on cash incoming and cash…

Q: How is working capital handled in the calculation of cash flows from a capital investment? Is it…

A: Working capital or net working capital is equals to firm’s current assets minus current liabilities,…

Q: Operating cash flows rather than accounting income are listed in Table 12.1. Why do we focus on cash…

A: Answer: The main reason why we are focusing on cash flows is only because cash can be invested or…

Q: What are the primary benefits of reporting cash flows from operational operations in an indirect…

A: This question explains about cash flows from operational operations in an indirect manner

Q: An investment property is considered to generate cash flows that are?

A: Investment property can be defined as the property consisting of land or building which is not…

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: 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: If depreciation is not a cash flow item, why does it affect the level of cash flows from a project…

A: The term depreciation refers to the process of systematically allocating the cost of a fixed asset…

Q: How is the estimation of relevant cash flows one of the most important parts of this…

A: Capital budgeting is the process a company follows to decide whether to purchase a fixed asset or…

Q: What is the principal advantage and the principal disadvantage of the direct method of reporting…

A: Statement of cash flows: This statement reports all the cash transactions which are responsible for…

Q: What is the principal disadvantage of the direct method of reporting cash flows from operating…

A: Cash flows from operating activities is an important section of cash flow statement which shows all…

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: How must profits and losses be handled when generating the operational portion of the cash flow…

A: The cash flow statement assesses a company's capacity to manage its financial situation, namely how…

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…

Q: How much is the net cash flow from operating activities using indirect method?

A:

Q: what is the principal disavantage of the direct method of reporting cash flow from operating…

A: Direct method: This method uses only cash basis for preparing the cash flows statement. In this…