Which of the following cash flows are NOT considered in the calculation of the initial outlay for a capital investment proposal?
A) Increase in accounts receivable
B) The cost of shipping new equipment
C) The cost of issuing new bonds if the project is financed by a new bond issue
D) The cost of installing new equipment

Question

Quizplus · Accepted Answer

The cost of issuing new bonds if the project is financed by a new bond issue (C) is not considered in the calculation of the initial outlay for a capital investment proposal. The initial outlay typically includes costs directly associated with acquiring and installing the new project, such as the cost of the equipment, shipping, and installation, but not the financing costs. Financing costs are treated separately in the analysis, often through the discount rate or cost of capital.

Which of the Following Cash Flows Are NOT Considered in the Calculation