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11 Cards in this Set
- Front
- Back
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The incremental cash flows of a project can best be defined as the difference between
a firm’s _____ with and without the project. |
d. future cash flows
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The stand-alone principle is the assumption that the evaluation of a project may be
based on the project’s |
c. incremental cash flows.
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A cost that has already been incurred and cannot be recouped is referred to as a(n)
_____ cost. |
sunk
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A pro forma financial statement is a financial statement which:
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d. projects future years’ operations.
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The depreciation tax shield is defined as:
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D × T.
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A U.S. depreciation system which allows for more rapid depreciation under various
classifications is called the _____ system. |
accelerated cost recovery
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The analysis of the effects that what-if questions have on a project is referred to as
_____ analysis |
scenario
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The analysis of the effect that a single variable has on the net present value of a project
is called _____ analysis. |
sensitivity
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When a firm cannot raise financing for a project under any circumstances, the firm is
facing a situation known as: |
hard rationing
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a firm cannot raise additional funds due to a preexisting contractual agreement.
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soft rationing
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situation a firm faces when it has positive net present value projects but cannot
obtain financing for those projects is referred to as: |
b. capital rationing.
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