Which of the Following Items Is NOT a Relevant Cash

question 141

Multiple Choice

Which of the following items is NOT a relevant cash inflow or cash outflow when using the net present value method? (Ignore income taxes.)

• A) acquisition cost of new equipment at time zero
• B) future disposal value of a long-term plant asset
• C) future operating cash inflows from a long-term plant
• D) depreciation expense in future periods

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Definitions:

Expected Value

The anticipated value of a variable, computed as an average of all possible values weighted by their probabilities.

Expected Monetary Value

A calculation used in decision-making to determine the average outcome when the future includes scenarios that may or may not happen.

Analytic Decision Making

The process of making choices by systematically analyzing information, evaluating alternatives, and basing decisions on rational evidence.

Maximin Criterion

A decision rule used in statistics, economics, and game theory that selects the action maximizing the minimum payoff possible from available choices.