Question

How does financial management contribute to the value of the firm in a capital investment decision?

a.

By increasing initial cash outlay

b.

By decreasing net cash inflow

c.

By ensuring the present value of the future stream of net cash inflow expected from the proposed investment is greater than the initial cash outlay

d.

By ignoring the analysis of investments and inflows

Posted under IC 89 Management Accounting

Answer: (c).By ensuring the present value of the future stream of net cash inflow expected from the proposed investment is greater than the initial cash outlay Explanation:Financial management contributes to the value of the firm in a capital investment decision by ensuring the present value of the future stream of net cash inflow expected from the proposed investment is greater than the initial cash outlay.

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Q. How does financial management contribute to the value of the firm in a capital investment decision?
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