Which of the following is not a cash flow that results from the decision to accept a project?
A) Changes in working capital.
B) Shipping and installation costs.
C) Sunk costs.
D) Opportunity costs.
E) Externalities.

Question

Quizplus · Accepted Answer

Sunk costs are costs that have already been incurred and cannot be recovered. They are not considered in cash flow analysis for a new project because they are irrelevant to future decision making. Therefore, they are not a cash flow that results from the decision to accept a project. Choices A, B, D, and E are all cash flows that should be considered in investment analysis.

Which of the Following Is Not a Cash Flow That