Which of the following is a component of net-initial-investment cash flows?
A) original cost of an old equipment
B) cash outflow to purchase a new equipment
C) depreciation cost
D) after-tax cash flow from operations

Question

Quizplus · Accepted Answer

Net-initial-investment cash flows refer to the cash flows involved in acquiring a new asset. Therefore, the cash outflow to purchase a new equipment is a component of net-initial-investment cash flows. Options A and C refer to the cost and depreciation of an old asset, which are not part of the initial investment in a new asset. Option D refers to after-tax cash flows from operations, which are not relevant to net-initial-investment cash flows.

Which of the Following Is a Component of Net-Initial-Investment Cash