Which of the following should be included in the analysis of a project's incremental cash ﬂows? I.Sunk costs.
II)Opportunity costs.
III)Erosion costs.
IV)Incremental costs.

Question

Quizplus · Accepted Answer

Incremental cash flows for a project should include opportunity costs, erosion costs (also known as cannibalization effects), and the specific incremental costs associated with the project. Sunk costs, which are costs that have already been incurred and cannot be recovered, should not be included in the analysis of a project's incremental cash flows.

Which of the Following Should Be Included in the Analysis