Which of the following statements is FALSE?Group of answer choicesAs a practical matter, to derive the forecasted cash flows of a project, financial managers often begin by forecasting earnings.When evaluating a capital budgeting decision, we generally include interest expense.The decision to continue or abandon a project should be based only on the incremental costs and benefits of the project going forward.Earnings are not cash flows.

Which of the following statements is FALSE? A.Many projects use a resource that the company already owns. B.When evaluating a capital budgeting decision, we generally include interest expense. C.Only include as incremental expenses in your capital budgeting analysis the additional overhead expenses that arise because of the decision to take on the project. D.As a practical matter, to derive the forecasted cash flows of a project, financial managers often begin by forecasting earnings.

Which of the following statements is FALSE?Group of answer choicesSunk costs have been incurred regardless of the decision whether or not to proceed with the project.When performing capital budgeting, we do not usually calculate the tax associated with the capital expenditure.When computing the incremental earnings of an investment decision, we should include all changes between the firm's earnings with the project versus without the project.Overhead expenses are associated with activities that are not directly attributable to a single business activity but instead affect many different areas of the corporation.

Which of the following statements is FALSE? A.When evaluating a capital budgeting decision, the correct tax rate to use is the firm's average corporate tax rate. B.To determine the capital budget, firms analyze alternative projects and decide which ones to accept through a process called capital budgeting. C.A new product typically has lower sales initially, as customers gradually become aware of the product. D.Sunk costs have been or will be paid regardless of the decision whether or not to proceed with the project.

Which of the following statements are true?I. To measure relevant project cash flows, the analyst take the difference between “doing” vs. “not doing” a projectII. Depreciation is a non-cash item, but it saves cash taxesIII. Use the average of historical cash flows from similar past projects instead of estimating future cash flowsIV. Include salvage (or terminal) values that recover the initial investmentI and II onlyII and III onlyI, II and IV onlyI and IV onlyAll of the statements are true

Which of the following statements is FALSE?Group of answer choicesIncome Tax = EBIT × Corporate Tax RateWe begin the capital budgeting process by determining the incremental earnings of a project.When sales of a new product displace sales of an existing product, the situation is often referred to as opportunity cost.Managers sometimes continue to invest in a project that has a negative NPV because they have already invested a large amount in the project and feel that by not continuing it, the prior investment will be wasted.