Capital budgeting projects typically assume that all cash flows transpire at the end of the year. The reason for this is that:
A) less tax liability results from this practice.
B) balance sheets are prepared at the end of the year.
C) it makes forecasting easier for the analyst.
D)most corporations collect their cash at the end of the year.

Question

Quizplus · Accepted Answer

Capital budgeting simplifies the complex reality of cash flows into annual summaries, making forecasting and analysis more manageable for analysts. This assumption does not primarily concern tax, balance sheet timing, or corporate cash collection practices.

Capital Budgeting Projects Typically Assume That All Cash Flows Transpire