The book value of an asset that is being replaced is a relevant cash flow in the net present value method.

Name: The book value of an asset that is being replaced is a relevant cash flow in the net present value method.
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Question

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The book value of an asset being replaced is a sunk cost and is not considered a relevant cash flow in the net present value (NPV) method. Relevant cash flows are those that will change as a direct result of the decision being evaluated.

The Book Value of an Asset That Is Being Replaced