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NEW QUESTION: 1
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C. All of the answers are correct.
D. None of the answers are correct.
E. In estimating net cash flows for the purpose of capital budgeting, interest and dividend payments should not be included since the effects of these items are already included in the weighted average cost of capital.
Answer: E
Explanation:
Explanation/Reference:
Explanation:
Interest payments should not be included in the estimated cash flows because the effects of debt financing are reflected in the cost of capital used to discount the cash flows. If interest was subtracted from the cash flows, and then the remaining cash flows were discounted, the cost of debt would be double-counted.
NEW QUESTION: 2
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Answer: D
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