Which of the following factors should be included in the cash flows used to estimate a project's NPV?

Question

Quizplus · Accepted Answer

Interest on funds borrowed (A) should be included in the cost of capital used to discount cash flows, but it is not part of the project's cash flows. Cannibalization effects (C) should be included if they decrease cash flows, not if they increase them. Expenditures on research and development (D) that have already been expensed are not relevant to the project's future cash flows. Costs incurred prior to the analysis (E) are sunk costs and should not be included in cash flows. The end-of-project recovery of working capital (B) should be included, as it represents a cash inflow when the project is completed.

Which of the Following Factors Should Be Included in the Cash