- CFA Exams
- CFA Level I Exam
- Topic 3. Corporate Issuers
- Learning Module 5. Capital Investments and Capital Allocation
- Subject 3. Capital Allocation Principles and Pitfalls
CFA Practice Question
It is important to identify and use only incremental cash flows in capital investment decisions ______
B. only when the stand-alone principle fails to hold.
C. because ultimately it is the change in a firm's overall future cash flows that matter.
D. in order to accommodate unforeseen changes.
E. whenever sunk costs are involved.
A. because they are the simplest to identify.
B. only when the stand-alone principle fails to hold.
C. because ultimately it is the change in a firm's overall future cash flows that matter.
D. in order to accommodate unforeseen changes.
E. whenever sunk costs are involved.
Correct Answer: C
User Contributed Comments 4
| User | Comment |
|---|---|
| mattg | Only incremental CFs matter! |
| johntan1979 | Yup... cook the books all you like, cash is king! |
| ldfrench | Johntan1979, I don't think a book would taste very good? (But I could be wrong) My favorite snack is carrots. |
| Znanje35 | Baby carrots |