Indirect cash flows caused by a capital budgeting project are not relevant to the project investment decision.

Question

Quizplus · Accepted Answer

Indirect cash flows caused by a capital budgeting project can be relevant to the project investment decision. They include changes in working capital and overhead costs that may be affected by the project. Therefore, it is important to consider both direct and indirect cash flows when evaluating the potential profitability of a capital budgeting project.

Indirect Cash Flows Caused by a Capital Budgeting Project Are