Which of the following items has no after-tax consequences in the analysis of a capital investment proposal?
A) Cash flow from operations.
B) Salvage value of an existing asset that would be sold.
C) Employee severance compensation.
D) Reduction of net working capital at the termination (expiration) of the proposed project.
E) Gain or loss on the disposal of the investment at the end of its useful life.

Question

Quizplus · Accepted Answer

Reduction of net working capital at the termination of a project typically involves recovering the initial investment in working capital, which does not have tax consequences.

Which of the Following Items Has No After-Tax Consequences in the Analysis