The incremental cash flows associated with a capital budgeting project that occur only at the start of a project's life are included in the computation of the project's _____.
A)initial investment outlay
B)terminal cash flows
C)sunk costs
D)supplemental operating cash flows
E)externalities

Question

The incremental cash flows associated with a capital budgeting project that occur only at the start of a project's life are included in the computation of the project's _____. 
A)initial investment outlay
B)terminal cash flows
C)sunk costs
D)supplemental operating cash flows
E)externalities

Quizplus · Accepted Answer

The incremental cash flows that occur at the start of a project's life are considered as initial investment outlay. These cash flows include costs such as equipment purchases, installation costs, and any other initial expenses required to start the project. These costs are not considered as operating cash flows because they occur only once at the start of the project. Therefore, the initial investment outlay is included in the computation of the project's cash flows.

The Incremental Cash Flows Associated with a Capital Budgeting Project That Occur Only