What would cause the initial cash outlay of an investment decision to be affected by the sale of an existing asset?
A) If the investment decision is a replacement decision
B) If the asset being purchased is technologically superior
C) If the asset being sold has exceeded its MACR's recovery allowance period
D) All of the above

Question

Quizplus · Accepted Answer

If the investment decision is a replacement decision, then the sale of an existing asset could affect the initial cash outlay. The sale of the existing asset would generate cash that could be used to offset the cost of the new asset, reducing the initial cash outlay.

What Would Cause the Initial Cash Outlay of an Investment