Concerning incremental project cash flow, which of these is a cost one would never count as an expense of the project?
A) Initial investment
B) Taxes paid
C) Operating expenses of the project
D) Financing costs

Question

Quizplus · Accepted Answer

Financing costs are not considered an expense of the project in the context of calculating incremental cash flows because these costs are accounted for in the discount rate (cost of capital) used to evaluate the project's net present value (NPV). Incremental cash flows focus on the operational aspects and direct financial impacts of the project itself, excluding how it is financed.

Concerning Incremental Project Cash Flow, Which of These Is a Cost