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4 February, 19:14

Without proposed Project A, a firm's estimated cash flows over the next 3 years is $275M. With proposed Project A, the firm's estimated cash flows over the next 3 years is $300M. What is the amount of incremental cash flows associated with Project A? A. $300M B. $25M C. $275M D. $575M

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  1. 4 February, 19:37
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    option B) $ 25M

    Explanation:

    Data provided in the problem:

    Without proposed project A,

    The estimated cash flows over the next 3 years = $ 275M

    With the proposed project A,

    The estimated cash flows over the next 3 years = $ 300M

    Now, the amount of incremental cash flows associated with Project A will be calculated as;

    Incremental cash flow = Cash flows (With Project A) - Cash flows (Without Project A)

    on substituting the values, we get

    Incremental cash flow = $ 300M - $ 275M = $ 25M

    Hence, the correct answer is option B.
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