Relevant cash flows are the incremental cash outflows and inflows associated with a proposed capital expenditure.

Question

Quizplus · Accepted Answer

Relevant cash flows are the cash flows that are directly affected by a proposed capital expenditure. These cash flows include the incremental cash outflows associated with the proposed project, such as the initial investment in equipment or machinery, as well as the incremental cash inflows associated with the project, such as the increased revenue generated by the project. Therefore, relevant cash flows are important in determining the feasibility of a proposed capital expenditure.

Relevant Cash Flows Are the Incremental Cash Outflows and Inflows