Which of the Following Is NOT a Relevant Cash Flow

question 77

Multiple Choice

Which of the following is NOT a relevant cash flow and thus should not be reflected in the analysis of a capital budgeting project?

• A) Shipping and installation costs.
• B) Cannibalization effects.
• C) Opportunity costs.
• D) Sunk costs that have been expensed for tax purposes.
• E) Changes in net working capital.

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Definitions:

Long Run

In economics, a period in which all factors of production and costs are variable, allowing for full adjustment to changes.

Profit

The financial gain achieved when the amount earned from a business activity exceeds the expenses, costs, and taxes involved in sustaining the activity.

Loss

An economic condition where expenses exceed revenues, resulting in negative profit.

Price Discrimination

Price discrimination is the strategy of selling the same product at different prices to different groups of consumers, often based on their willingness to pay, location, or purchase volume.