In the NPV method,the cash outflow for the purchase of equipment is an example of an operating cash flow.

Question

Quizplus · Accepted Answer

The cash outflow for the purchase of equipment is an example of a capital expenditure, which is a cash flow related to investment activities, not operating activities. Operating cash flows include cash inflows and outflows related to the day-to-day operations of the business, such as revenues, expenses, and working capital changes.

In the NPV Method,the Cash Outflow for the Purchase of Equipment