Incremental cash flows include all of the following EXCEPT:
A) research and development costs.
B) increased labor costs from the project.
C) advertising costs .
D) both B and C.

Question

Quizplus · Accepted Answer

Incremental cash flows are the additional cash flows expected as a result of a particular project or investment. Research and development costs are not considered incremental cash flows because they are sunk costs that have already been incurred and cannot be recovered. Increased labor costs and advertising costs are considered incremental cash flows, as they represent new costs that will be incurred as a result of the project. Therefore, the correct answer is A.

Incremental Cash Flows Include All of the Following EXCEPT