Asked by Briana Arredondo on Jul 17, 2024
Verified
The evaluation of a project based solely on its incremental cash flows is the basis of the:
A) Incremental cash flow method.
B) Stand-alone principle.
C) Dividend growth model.
D) After-tax salvage value analysis.
E) Discounted payback method.
Incremental Cash Flows
The additional cash flow a new project is expected to generate.
After-Tax Salvage Value
The net value of a disposed asset after accounting for any taxes incurred or savings on the salvage.
- Understand the principle of evaluating projects based solely on incremental cash flows.
- Grasp the stand-alone principle in project evaluation.
Verified Answer
RD
Robin DickinsonJul 24, 2024
Final Answer :
B
Explanation :
The stand-alone principle involves evaluating a project based on its incremental cash flows, treating the project as if it were a separate entity.
Learning Objectives
- Understand the principle of evaluating projects based solely on incremental cash flows.
- Grasp the stand-alone principle in project evaluation.
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