The relevant cash flows of a project do not include which one of the following?
A) incremental after-tax cash flows
B) cannibalization effects
C) opportunity costs
D) sunk costs

Question

Quizplus · Accepted Answer

Sunk costs are costs that have already been incurred and cannot be recovered. As such, they are not relevant to the decision-making process of whether to undertake a project or not. The other options (incremental after-tax cash flows, cannibalization effects, and opportunity costs) are all important factors in determining the relevant cash flows of a project.

The Relevant Cash Flows of a Project Do Not Include