The reason cash flow is used in capital budgeting is because:
A) income rather than cash is used to purchase new machines.
B) cash outlays need not be evaluated in terms of the present value of the resultant cash inflows.
C) the tax shield provided from amortization ignores the cash flow provided by the machine which should be reinvested to replace old worn out machines.
D) cash flow includes accounting accruals.
Correct Answer:
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Q42: The internal rate of return (IRR)assumes that
Q43: The internal rate of return is:
A) less
Q44: NPV is superior to average accounting return
Q45: Q47: Which statement is true about amortization? Q48: Capital budgeting is primarily concerned with Q48: Capital rationing assumes that: Q49: The internal rate of return (IRR)and net Q50: The first step in the capital budgeting Q51: The modified internal rate of return (MIRR)assumes:
A) Amortization
A) capital
A) a limited amount
A)
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