When computing the net present value of a project, the net amount received from salvaging the ﬁxed assets used in the project is:
A) Subtracted from the initial cash outlay.
B) Included in the ﬁnal cash ﬂow of the project.
C) Excluded from the analysis since it occurs only when the project ends.
D) Subtracted from the original cost of the assets.
E) Added to the net present value of the project to determine if the project is acceptable.

Question

Quizplus · Accepted Answer

The net amount received from salvaging the fixed assets used in the project should be included in the final cash flow of the project, as it represents a cash inflow that occurs at the end of the project. It should not be subtracted from the initial cash outlay or the original cost of the assets, as this would result in double counting. It also should not be excluded from the analysis, as it represents a significant cash flow that impacts the net present value of the project. It should not be added to the net present value of the project, as it has already been included in the final cash flow.

When Computing the Net Present Value of a Project, the Net