Which of the following cash flows are relevant incremental cash flows for a project that you are currently considering investing in?
A)The tax savings brought about by the project's depreciation expense
B)The cost of a marketing survey you conducted to determine demand for the proposed project
C)Interest payments on debt used to finance the project
D)Research and Development expenditures you have made

Question

Quizplus · Accepted Answer

The tax savings from depreciation are relevant because they directly affect the project's cash flows. The marketing survey and R&D costs are sunk costs and not incremental, while interest payments are financing costs, not operating cash flows.

Which of the Following Cash Flows Are Relevant Incremental Cash