ABC Engineering just bought a new machine. All of the following are examples of incremental cash flows except _______________.

Question

Quizplus · Accepted Answer

Interest expense on the loan used to purchase the machine is not an incremental cash flow because it is not a direct result of the new machine. It is simply the cost of financing the purchase and would have been incurred regardless of whether or not the machine was bought. B, C, and D are all examples of incremental cash flows because they directly result from the purchase of the new machine.

ABC Engineering Just Bought a New Machine