Which of the following best describes why cash flows are utilized - 3866

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Which of the following best describes why cash flows are utilized rather than accounting profits when evaluating capital projects?

a.Cash flows have a greater present value than accounting profits.

b.Cash flows reflect the timing of benefits and costs more accurately than accounting profits.

c.Cash flows are more stable than accounting profits.

d.Cash flows improve the tax position of a firm more than accounting profits.

e.None of the above

 
Solution Description

Which of the following best describes why cash flows are utilized rather than accounting profits when evaluating capital projects?