When evaluating an investment,the MNC should consider the ____________ cash flows generated by the project.

Question

Quizplus · Accepted Answer

When evaluating an investment, the most relevant cash flows are the incremental cash flows generated by the project. Incremental cash flows are the cash flows that will result from undertaking the project, as opposed to the cash flows that would have been generated if the project were not undertaken. This includes both the additional revenues generated and the additional costs incurred as a result of the project. Therefore, C is the correct choice. Total cash flows (A) may include cash flows that are not relevant to the project, variable cash flows (B) may not capture all relevant costs, and fixed cash flows (D) do not account for changes in revenue or costs.

When Evaluating an Investment,the MNC Should Consider the ____________ Cash