Which of the following is NOT a relevant cash flow and thus should NOT be reflec
ID: 2804785 • Letter: W
Question
Which of the following is NOT a relevant cash flow and thus should NOT be reflected in the analysis of a capital budgeting project?
Cannibalization effects.
Changes in net operating working capital.
Sunk costs that have been expensed for tax purposes.
Shipping and installation costs for machinery acquired.
Opportunity costs
a.Cannibalization effects.
b.Changes in net operating working capital.
c.Sunk costs that have been expensed for tax purposes.
d.Shipping and installation costs for machinery acquired.
e.Opportunity costs
Explanation / Answer
Sunk costs that have been expensed for tax purposes.
sunk costs are never recovered and do not play a part in the budgeting purpose
Sunk costs that have been expensed for tax purposes.
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