When analyzing a capital budgeting project,the analyst must include in his calculation all of the following except
A)all revenues and costs in terms of cash flows.
B)only those cash flows that will change if the proposal is accepted (i.e.,incremental cash flows).
C)interest payments on debt financing connected with the project.
D)any effect (impact)the acceptance of the project under consideration will have on other projects now in operation.

Question

Quizplus · Accepted Answer

Interest payments on debt financing connected with the project should not be excluded from the calculation. All costs, including interest payments, must be considered in order to accurately determine the net present value (NPV) of the project. Therefore, all choices except for C should be included when analyzing a capital budgeting project.

When Analyzing a Capital Budgeting Project,the Analyst Must Include in His