hich of the following may not generally result in underestimation of project cash flows?Under estimation of salvage valuesIgnoring intangible benefitsOverlooking the value of future optionsUnder estimation of project cost of capital

All of the following are anticipated effects of a proposed project. Which of these should be considered when calculating the cash flow for the final year of a project?Group of answer choicesnet working capital recovery and operating cash flowsalvage values and net working capital recoveryoperating cash flow, net working capital recovery, salvage valuesoperating cash flow onlyoperating cash flow and salvage values

Which of the following will increase cash flow?Working capital requirements decreaseEstimate of salvage value increasesDepreciation expenses increaseNone of the aboveAll of the above

Which of the following is not a good assumption to identify relevant cash flows?A new long-term investment project should “stand on its own feet” and be viewed as a “mini firm”Sunk costs and financial costs should not be includedOpportunity costs that can be attributed to the project should be includedOverhead costs that remain fixed should be allocatedChanges in working capital should be included

he profitability of an investment project is determined by evaluating its ……………None of the above.Cash outflow Cash flowsCash inflow

Case StudyThe expected cash flows of three projects are given below. The cost of capital is 10 per cent. (Amount in INR.)Period   Project A Project B   Project C 0 ( 5000) ( 5000) ( 5000)1 900 700 2,0002 900 800 2,0003 900 900 2,0004 900 1000 1,0005 900 1100  6 900 1200  7 900 1300  8 900 1400  9 900 1500  10 900 1600  * CALCULATE the payback period, net present value, internal rate of return and accounting rate of return of each project.*IDENTIFY the rankings of the projects by each of the four methods. Based on the calculations, choose the correct answers of  the below mentioned questions.