When calculating the net cash flow in a project's expected final year, the ____.
A) recovery of any working capital invested is disregarded
B) after-tax salvage value of any project equipment is considered
C) remaining principal on any borrowed funds is considered
D) sales proceeds from any land associated with the project is disregarded

Question

Quizplus · Accepted Answer

When calculating the net cash flow in a project's expected final year, the after-tax salvage value of any project equipment is considered. This is because the equipment can be sold at the end of its useful life and generate a cash inflow for the project. The recovery of any working capital invested is not disregarded but is included in the calculation. The remaining principal on any borrowed funds is also considered. The sales proceeds from any land associated with the project may or may not be relevant depending on the specific project.

When Calculating the Net Cash Flow in a Project's Expected