FIN 534 RANK Imagine Your Future /fin534rank.com FIN 534 RANK Imagine Your Future /fin534rank.com | Page 142

Which of the following statements is CORRECT?
Question 21
A company is considering a new project. The CFO plans to
calculate the project’s NPV by estimating the relevant cash flows for
each year of the project’s life (i.e., the initial investment cost, the annual
operating cash flows, and the terminal cash flow), then discounting those
cash flows at the company’s overall WACC. Which one of the
following factors should the CFO be sure to INCLUDE in the cash flows
when estimating the relevant cash flows?
Question 22
Which of the following factors should be included in the cash
flows used to estimate a project’s NPV?