Chapter 12 Finance Final. Top Class Solution.

We want to know if the new investment will produce enough? incremental cash flow to justify the incremental investment Mutually exclusive projects? Only ONE project can be accepted (the one with the highest NPV) Independent projects? Cash flows are not affected by the acceptance or non acceptance of other projects (NPV > 0 accepted) Incremental cash flows includes? investments in BUILDINGS, EQUIPMENT, WORKING CAPITAL needed for the project, SALES REVENUE, and OPERATING COSTS associated with the project NPV is ____ with accelerated depreciation? NPV is ____ with straight line depreciation? HIGHER LOWER Why should companies use a project's free cash flow rather than accounting income when determining a project's NPV? to see if the return on cash invested in one project is better than the return on cash invested in another project, while income is determined by many other variables that have nothing to do with cash