Asked by
Divya Relangi
on Dec 20, 2024Verified
Which of the following is not a cash flow consideration in evaluating a proposed capital project?
A) Increases in net working capital
B) Basic overhead expenses
C) Sales lost from other parts of the company because of the project
D) Foregone depreciation resulting from a replacement machine
Net Working Capital
Net working capital refers to the difference between a company's current assets and its current liabilities.
Overhead Expenses
Ongoing business costs not directly tied to creating a product or service but necessary for running the business, such as rent, utilities, and administrative expenses.
Foregone Depreciation
The concept relating to the depreciation that could have been claimed for tax purposes but was not, often due to timing or election of different tax treatments.
- Recognize the importance of incremental cash flows in the assessment of capital projects.
- Acknowledge the impact of a project on other parts of the company and the treatment of related expenses.
Verified Answer
KH
Learning Objectives
- Recognize the importance of incremental cash flows in the assessment of capital projects.
- Acknowledge the impact of a project on other parts of the company and the treatment of related expenses.