Which of the following is considered an incremental cash flow? a. All costs associated with the...

Which of the following is considered an incremental cash flow?

a. All costs associated with the project that have been incurred prior to the time the analysis is being conducted.

b. Interest on funds borrowed to help finance the project.

c. The end-of-project recovery of any additional net operating working capital required to operate the project.

d. Expenditures to date on research and development related to the project, provided those costs have already been expensed for tax purposes.

Expert Solution

Opportunity costs are the relevant cash flows of the project. All the relevant cash flows must be considered as incremental or decremental cash flows while evaluating project decisions. Except market research all are incremental costs. Change in working capital is incremental cash flow.

Hence, correct option is C.

jeff jeffy answered 2 years ago

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