Relevant cash flows for long-term decisions include:
I. Revenues for new projects or services
II. Variable costs for new projects or services
III. Labour or electricity savings for replacement of old equipment
A) II and III only
B) I and III only
C) I and II only
D) I, II, and III

Question

Quizplus · Accepted Answer

Relevant cash flows for long-term decisions include all three options listed, as they all impact the financial outcome of the decision. Revenue and variable costs are directly related to the profitability of the new project or service, while labour or electricity savings from replacing old equipment can reduce costs and increase cash flows over the long-term. Therefore, all three options should be considered in making long-term decisions.

Relevant Cash Flows for Long-Term Decisions Include