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Posted: June 15th, 2022

that would increase productive capacity. Which of the

An organization is contemplating a proposed new plant that would increase productive capability. Which of the following statements is CORRECT?a. In calculating the mission’s working money flows, the agency shouldn’t deduct financing prices resembling curiosity expense, as a result of financing prices are accounted for by discounting at the WACC. If curiosity have been deducted when estimating money flows, this would, in impact, “double count” it.b. Since depreciation is a non-cash expense, the agency doesn’t have to take care of depreciation when calculating the working money flows.c. When estimating the project’s working money flows, you will need to embrace each alternative prices and sunk prices, however the agency ought to ignore the money movement results of externalities since they’re accounted for in the discounting course of.d. Capital budgeting selections ought to be based mostly on before-tax money flows.e. The WACC used to low cost money flows in a capital budgeting Assessment ought to be calculated on a before-tax foundation.

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