CHAPTER 9 PRACTICE TESTS FOR EXAM - CHAPTER 9 PRACTICE...

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CHAPTER 9 PRACTICE TESTS FOR EXAM . The first step in estimating cash flow is to determine the ______ cash flows. and: relevant . The difference between a firm’s cash flows with a project versus without the project is called____ ans: incremental cash flows . According to the ____ principle, once the incremental cash flows from a project have been identified, the project can be viewed as a “minifirm”. ans: stand alone . Sunk costs are costs that____ ans: have already occurred and are not affected by accepting or rejecting a project. . Which of the following is an example of an opportunity cost? ans: Rental income likely to be lost by using a vacant building for an upcoming project. . Opportunity costs are____ ans: benefits lost due to taking on a particular project. . Erosion will ____ the sales of existing products. ans: reduce . Which of the following are considered relevant cash flows? ans: all of the following: cash flows from erosion effects cash flows from opportunity costs cash flows from beneficial spillover effects . Investment in net working capital arises when___
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