A project's cash flow is equal to the project's operating cash flow:
A) plus the project's depreciation expense minus both the project's taxes and capital spending.
B) minus both the project's change in net working capital and capital spending.
C) minus the project's change in net working capital plus all of the depreciation expenses.
D) plus the project's depreciation expenses minus the project's taxes.
E) minus the project's taxes.

Question

Quizplus · Accepted Answer

The correct calculation of a project's cash flow involves subtracting both the project's change in net working capital and capital spending from its operating cash flow. This accounts for the cash needed to fund working capital and capital expenditures, which are not captured in operating cash flow alone.

A Project's Cash Flow Is Equal to the Project's Operating