Projected disposal or residual values of replacement equipment are relevant to capital investment analysis because

Question

Quizplus · Accepted Answer

Projected disposal or residual values of replacement equipment represent future cash inflows and are usually different among alternatives. Therefore, they are relevant to capital investment analysis as they impact the future cash flows of the investment and can affect the decision of which alternative to choose. The fact that they reduce income taxes is not always relevant or significant in the investment analysis.

Projected Disposal or Residual Values of Replacement Equipment Are Relevant