Which of the following is NOT a relevant cash flow and thus should NOT be reflected in the analysis of a capital budgeting project?
A) Changes in net operating working capital.
B) Shipping and installation costs for machinery acquired.
C) Cannibalization effects.
D) Opportunity costs.
E) Sunk costs that have been expensed for tax purposes.

Question

Quizplus · Accepted Answer

Sunk costs are costs that have already been incurred and cannot be recovered. They should not be considered in the analysis of a new project because they will remain the same regardless of the decision made about the project.

Which of the Following Is NOT a Relevant Cash Flow