The relevant cash flows for a proposed capital expenditure are the incremental after-tax cash outflows and resulting subsequent inflows.

Question

Quizplus · Accepted Answer

The relevant cash flows for a proposed capital expenditure, also known as net cash flows, are the incremental after-tax cash outflows and resulting subsequent inflows. These cash flows are the ones that will be affected by the capital expenditure and should be the basis for evaluating the investment decision.

The Relevant Cash Flows for a Proposed Capital Expenditure Are