You are asked to select the proposed project A or B that has the highest Operati

Question

You are asked to select the proposed project A or B that has the highest Operating Cash Flow (OCF). Proposed Project A has estimated net income = $3,000, depreciation expense of $1,000 and non-cash revenue = $1,000. Proposed Project B has estimated net income = -$1,000, depreciation of $5,000 and non-cash revenue = $500. The other analyst selects Proposed Project A as the highest OCF; you ____ because ____.

agree; Proposed Project A's net income is positive and Proposed Project B's is negative

disagree; Proposed Project A's OCF is lower than Proposed Project B's OCF

agree; Proposed Project A's OCF is higher than Proposed Project B's OCF

disagree; although Proposed Project A's OCF is lower, Proposed Project B's net income is negative

agree; Proposed Project A's net income is positive and Proposed Project B's is negative

disagree; Proposed Project A's OCF is lower than Proposed Project B's OCF

agree; Proposed Project A's OCF is higher than Proposed Project B's OCF

disagree; although Proposed Project A's OCF is lower, Proposed Project B's net income is negative

Explanation / Answer

true answer is

disagree; Proposed Project A's OCF is lower than Proposed Project B's OCF

disagree; Proposed Project A's OCF is lower than Proposed Project B's OCF

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