A company is considering the acquisition of new equipment to replace old equipment.When using the net present value method,which of the following items is NOT relevant? Ignore taxes.

Question

Quizplus · Accepted Answer

Fixed overhead costs that remain the same under both alternatives are not relevant to the decision-making process as they do not affect the cash flows or the net present value of the investment. All other options are relevant and need to be considered in calculating the net present value of the investment.

A Company Is Considering the Acquisition of New Equipment to Replace