Which of the following best defines incremental earnings?
A)cash flows arising from a particular investment decision
B)the amount by which a firm's earnings are expected to change as the result of an investment decision
C)the earnings arising from all projects that a company plans to undertake in a fixed timespan
D)the net present value (NPV)of earnings that a firm is expected to receive as the result of an investment decision

Question

Quizplus · Accepted Answer

Incremental earnings refer to the increase in a firm's earnings that is expected to result from a particular investment decision. It is not the earnings from all projects undertaken or the cash flows arising from a single investment decision, nor is it the NPV of earnings.

Which of the Following Best Defines Incremental Earnings