BCOR 2204 Quiz 3 2026-Quizzes with Correct
Answers
Incremental Cash Flows
any changes to a firms projected future cash flows that are caused by adding a new project
Sunk Cost
a cost that should be ignored when evaluating a project because that cost has already been
incurred and cannot be recouped
Opportunity Cost
refers to the best option that was foregone when a particular investment is selected
Erosion
describes the cash flows of a new project that are simply an offset of reduced cash flows for a
current project
Pro Forma Financial Statement
projects future years operating results; includes fixed costs, forecasted sales, depreciation
expense, taxes
Scenario Analysis
estimating net present value of a project under various conditions by revising the sales quantity,
sales price, and cost estimates
Sensitivity Analysis
, analyzing a proposed project to determine how changes in the sales quantity would affect the
project's net present value
Net Working Capital Invested is Generally....
recouped at the end of the project
Operating Cash Flow increases.....
when the tax rate decreases
Venture Capital
the most apt to be the source of funding for a new, high-risk venture
Prospectus
the legal document that is provided to potential investors and describes a new security offering
Initial Public Offering
the first sale of equity shares to the general public
Seasoned Equity Offering
a new issue of common stock offered to the general public by a firm that is currently publicly
held
Underwriter
assists issuers by pricing and selling new securities to the general public
Spread
retaining the difference between the buying pice and offering price on new securities
Answers
Incremental Cash Flows
any changes to a firms projected future cash flows that are caused by adding a new project
Sunk Cost
a cost that should be ignored when evaluating a project because that cost has already been
incurred and cannot be recouped
Opportunity Cost
refers to the best option that was foregone when a particular investment is selected
Erosion
describes the cash flows of a new project that are simply an offset of reduced cash flows for a
current project
Pro Forma Financial Statement
projects future years operating results; includes fixed costs, forecasted sales, depreciation
expense, taxes
Scenario Analysis
estimating net present value of a project under various conditions by revising the sales quantity,
sales price, and cost estimates
Sensitivity Analysis
, analyzing a proposed project to determine how changes in the sales quantity would affect the
project's net present value
Net Working Capital Invested is Generally....
recouped at the end of the project
Operating Cash Flow increases.....
when the tax rate decreases
Venture Capital
the most apt to be the source of funding for a new, high-risk venture
Prospectus
the legal document that is provided to potential investors and describes a new security offering
Initial Public Offering
the first sale of equity shares to the general public
Seasoned Equity Offering
a new issue of common stock offered to the general public by a firm that is currently publicly
held
Underwriter
assists issuers by pricing and selling new securities to the general public
Spread
retaining the difference between the buying pice and offering price on new securities
