Which of the following items would not represent an incremental cash flow?
A) Salvage value of the new asset required for the project.
B) Purchase price of the new asset required for the project.
C) Interest payments for the debt used to finance the project.
D) Salvage value of an existing asset sold to make room for the new asset required for the project.

Question

Quizplus · Accepted Answer

Interest payments for the debt used to finance the project are not considered an incremental cash flow because they are a financing cash flow, not an operating cash flow. Incremental cash flows are the additional cash flows from operations that a project is expected to generate.

Which of the Following Items Would Not Represent an Incremental