Which amount is never used as part of the calculation of the annual operating cash flows in a capital budgeting decision?

Question

Quizplus · Accepted Answer

The salvage value of the new asset is not used in the calculation of annual operating cash flows because it is a one-time cash inflow that occurs at the end of the life of the asset. Operating cash flows are only concerned with cash inflows and outflows that occur during the life of the asset, so the salvage value is not included in these calculations. Cost savings due to reduced labor, additional overhead costs, and additional revenue are all factors that affect the cash flow during the life of the asset, and are therefore used in the calculation of annual operating cash flows.

Which Amount Is Never Used as Part of the Calculation