Which of the following is NOT a relevant cash flow and thus should not be reflected in the analysis of a capital budgeting project?
A) Shipping and installation costs.
B) Cannibalization effects.
C) Opportunity costs.
D) Sunk costs that have been expensed for tax purposes.
E) Changes in net working capital.

Question

Quizplus · Accepted Answer

Sunk costs that have already been expensed for tax purposes are irrelevant for capital budgeting decisions as they are not future cash flows that will be affected by the project. All other options listed are relevant cash flows that should be included in the analysis.

Which of the Following Is NOT a Relevant Cash Flow