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

Which of the following may not generally result in underestimation of project cash flows?(1 Point)Under estimation of project cost of capitalUnder estimation of salvage valuesIgnoring intangible benefitsOverlooking the value of future options

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

A company evaluates a new technology investment using discounted cash flow analysis. They weigh potential returns, considering risks and future cash inflows. What are the approaches to investment appraisal under uncertainty? Discuss.

Which of the following is not a relevant cash flow?Initial investmentWorking capitalSunk costsAfter-Tax Operating incomeDepreciation tax savings

answer each part separately.a) To finance a certain project, a company must borrow funds at 10 percent interest. Howshould it treat interest payments when it analyzes the project’s cash flows? Explain.b) What are the tax consequences of selling an investment asset for more than its book value?Does this have an effect on project cash flows? What is the effect if the asset is sold for lessthan its book value? Explain.c) Why must incremental after-tax cash flows rather than total cash flows be evaluated inproject analysis? Explain.d) Differentiate between sunk costs and opportunity costs. Which of these costs should beincluded in incremental cash flows, and which should be excluded? Explain.e) Why is it important to consider cannibalization in situations where a company isconsidering adding substitute products to its main product line? Explain.