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A project’s total (or net) cash flow will decrease when the ____________________. A) sales projections are...

A project’s total (or net) cash flow will decrease when the ____________________.
A) sales projections are higher
B) net working capital requirement decreases
C) variable costs decrease
D) depreciation expense decreases

Solutions

Expert Solution

A project's total (or net) cash flow will decrease when the:

D) depreciation expense decreases

Note:

1) Depreciation is a non-cash expenses which allows as deduction from the gross profit of a company as a the tax liability or tax payable will be low. So, if the depreciation expense decreases higher tax will be payable as a result the free cash flow / net cash flow will decrease and vice-versa.

2) HIgher sales projections, decrease in variable cost and decrease in net working capital requirement increase the total (or net) cash flow from project.

jeff jeffy answered 2 years ago
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