The initial outlay calculation for an ____ project normally includes ____.
A)asset expansion; pretax proceeds from the sale of the old asset
B)asset replacement; pretax proceeds from the sale of the old asset
C)asset expansion; after-tax proceeds from the sale of the old asset
D)asset replacement; after-tax proceeds from the sale of the old asset

Question

Quizplus · Accepted Answer

The question is asking about the initial outlay calculation for an asset replacement project, which involves selling the old asset and purchasing a new one. Therefore, the pretax proceeds from the sale of the old asset are not relevant. Instead, the after-tax proceeds should be used in the calculation to account for any taxes owed on the sale of the old asset. Option D correctly includes asset replacement and after-tax proceeds from the sale of the old asset.

The Initial Outlay Calculation for an ____ Project Normally Includes