Which of the following statements is true? a. The change in a firm\'s future cas

Question

Which of the following statements is true? a. The change in a firm's future cash flows resulting from adding a new project is referred to as residual cash flows. b. The cash flows of a new project that result from a reduction in the cash flows from a firm's existing projects are called erosion. c. A pro forma financial statement is a financial statement that expresses all values as a percentage of either total assets or total sales. d. The most valuable alternative that is forfeited if a particular investment is undertaken is called a marginal cost.

Explanation / Answer

The correct asnwer is option (B)

The cash flows of a new project that result from a reduction in the cash flows from a firm's existing projects are called erosion

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