Opportunity costs should be included as cash cash flows when determining a project's incremental cash flows.

Question

Quizplus · Accepted Answer

Opportunity costs are the potential benefits that are forgone by choosing one option over another. They represent a real cash outflow and should be considered as part of the project's incremental cash flows. Ignoring opportunity costs can lead to incorrect financial decisions and underestimate the true value of a project. Therefore, opportunity costs should always be included in the cash flow analysis.

Opportunity Costs Should Be Included as Cash Cash Flows When