If a project's cash flows include those triggered outside the project's incremental cash flows, it is likely that the:
A)Project interacts with other aspects of the firm
B)Project must have high depreciation expense
C)Opportunity cost of capital must be high
D)Project will have a negative NPV

Question

Quizplus · Accepted Answer

Cash flows that are triggered outside the project's incremental cash flows suggest that the project interacts with other aspects of the firm, indicating that there are external factors that affect the project's profitability. This can include, for example, cash flows that are shared with other business units or that result from changes in the market environment. Such interactions can affect the project's net present value (NPV) and require additional considerations when evaluating the project's viability.

If a Project's Cash Flows Include Those Triggered Outside the Project's