Which of the following rules are essential to successful cash flow estimates,and ultimately,to successful capital budgeting?
A) The return on invested capital is the only relevant cash flow.
B) Only incremental cash flows are relevant to the accept/reject decision.
C) Total cash flows are relevant to capital budgeting analysis and the accept/reject decision.
D) All of the above are correct.
E) Only answers a and b are correct.

Question

Quizplus · Accepted Answer

Only incremental cash flows are relevant to the accept/reject decision in capital budgeting. This means that the cash flows that should be considered are those that will change as a result of the investment decision.

Which of the Following Rules Are Essential to Successful Cash