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

Question

Quizplus · Accepted Answer

The after-tax salvage value of the project equipment is considered as it represents cash inflow at the end of the project. A is incorrect as recovery of working capital is taken into account. C is incorrect as the remaining principal on any borrowed funds is not relevant to cash flows in the final year. D is incorrect as the sales proceeds from any land associated with the project would also be included in the net cash flow.

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