For example, in case of an electric car project, the following cash flows should be treated as incremental flows when deciding whether to go ahead with the project except:
A) The consequent reduction in sales of the company's existing gasoline models (i.e.: incidental effects)
B) Interest payment on debt
C) The value of tools that can be transferred from the company's existing plants
D) The expenditure on new plants and equipment

Question

Quizplus · Accepted Answer

Interest payments on debt are considered financing costs and not part of the project's operational cash flows, so they are not treated as incremental cash flows for project evaluation.

For Example, in Case of an Electric Car Project, the Following