When evaluating Capital Budgeting decisions, which of the following items should NOT be included in the construction of cash flow projections for purposes of analysis?
A) Net salvage value
B) Changes in net working capital requirements
C) Shipping and installation costs
D) All of the above should be included.

Question

Quizplus · Accepted Answer

All of the items listed should be included in the construction of cash flow projections for capital budgeting decisions. Net salvage value represents the expected value of the asset at the end of its useful life and should be included in determining the total cash inflows from the project. Changes in net working capital requirements reflect the cash needed to support the project's operations and should be incorporated into the cash flow projections. Shipping and installation costs represent the initial cash outlays necessary for the project and should also be included in the analysis.

When Evaluating Capital Budgeting Decisions, Which of the Following Items