Which of the following should be included in the computation of an expansion project's terminal cash flow?
A)Any change in net working capital that was recognized at the time the projectwas purchased
B)The project's externalities
C)The initial cost (purchase price) of the project
D)The opportunity cost of the project
E)The sunk cost associated with the project

Question

Quizplus · Accepted Answer

Any change in net working capital that was recognized at the time the project was purchased should be included in the computation of an expansion project's terminal cash flow because it represents the difference between the current level of working capital and the level of working capital needed at the end of the project. It is important to consider this because it may affect the cash inflows and outflows at the end of the project. The other choices (B, C, D, and E) are not related to the computation of the terminal cash flow.

Which of the Following Should Be Included in the Computation