In estimating cash flows for capital bud (Check all that apply) #2. geting purpo
ID: 1171250 • Letter: I
Question
In estimating cash flows for capital bud (Check all that apply) #2. geting purposes, which of the following are correct? S points) The depreciation rate will affect ope cash outlay sunk costs associated with the project should always be included in your calculation of operating rating cash flows, even though depreciation ls not a cash flows Opportunity costs should be incorporated into your analysis. Any interest expense associated with the project must be included in operating cash flows Changes in working capital that are attributable to the project should be included XC #3-The current stock price of Johnson & Johnson, a large pharmaceutical firm, is $63.14 and expected earnings per share is $5.00. Earnings per share for Pfizer, Inc., one of their close competitors, is expected to be $2.29. Assuming these are comparable firms and based on this information, what would be an estimate of Pfizer's stock price? (S points) Pfizer's stock price-Explanation / Answer
Ans 2) Except for sunk cost and interest expense all other things are included in the operating cash flow for capital budgeting purposes. So option 1, 3 & 5 are correct.
Ans 3) Pfizer's stock price = 63.14 * 2.29/5 = $28.92