Cash flows to be considered in capital budgeting decisions generally fall into three major groups: initial investment, incremental operating cash flows, and terminal cash flows.

Question

Quizplus · Accepted Answer

These three groups of cash flows are essential in evaluating the viability of a project or investment. Initial investment includes the upfront costs, incremental operating cash flows represent the additional cash received or expended due to the project, and terminal cash flows account for the net cash during the project's disposal or end.

Cash Flows to Be Considered in Capital Budgeting Decisions Generally