Question

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

Answer 1

Answer:

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.