The changes in a firm's future cash flows that are a direct consequence of accepting a project are called _____ cash flows.
A) incremental
B) stand-alone
C) after-tax
D) net present value
E) erosion

Question

Quizplus · Accepted Answer

Incremental cash flows are the changes in a firm's future cash flows that are directly attributable to accepting a project. It is the difference between the cash flows the firm will have with the project and without it. Stand-alone cash flows are the cash flows of a project if it were the firm's only asset and were not financed with debt. After-tax cash flows are the cash flows that remain after the firm has paid taxes on its operating income. Net Present Value is the difference between the present value of cash inflows and the present value of cash outflows for a project. Erosion is the reduction in sales of an existing product due to the introduction of a new product.

The Changes in a Firm's Future Cash Flows That Are