Which of the following cash flows should be included as incremental costs when evaluating capital projects?
A)Investment in working capital that is directly related to a project
B)Expenses that are incurred in order to modify a firm's production facility in order to invest in a project
C)Overhead expenses that are directly related to a project
D)Opportunity costs that are directly related to a project
E)All of the above

Question

Quizplus · Accepted Answer

All of the options listed are examples of incremental costs that should be included when evaluating capital projects. Investment in working capital, facility modification expenses, overhead expenses, and opportunity costs are all additional costs incurred as a result of investing in a particular project and should therefore be accounted for when analyzing the project's potential profitability.

Which of the Following Cash Flows Should Be Included as Incremental