10. The pro forma income statement for a cost reduction project: A. will reflect a reduction in the sales of the firm.B. will generally reflect no incremental sales.C. has to be prepared reflecting the total sales and expenses of a firm.D. cannot be prepared due to the lack of any project related sales.E. will always reflect a negative project operating cash flow. 11. One purpose of identifying all of the incremental cash flows related to a proposed project is to: 12. Which of the following are examples of an incremental cash flow?I. an increase in accounts receivableII. a decrease in net working capitalIII. an increase in taxesIV. a decrease in the cost of goods sold 8-3
Chapter 08 - Making Capital Investment Decisions 13. Which one of the following is an example of an incremental cash flow? 14. Project analysis is focused on _____ costs. A. totalB. sunkC. variableD. fixedE. incremental 15. Sunk costs include any cost that: 16. You spent $500 last week fixing the transmission in your car. Now, the brakes are acting up and you are trying to decide whether to fix them or trade the car in for a newer model. In analyzing the brake situation, the $500 you spent fixing the transmission is a(n) _____ cost. 8-4
Chapter 08 - Making Capital Investment Decisions
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- Fall '13