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NEW QUESTION: 1
A company is considering an expansion project. The company's CFO plans to calculate the project's NPV by discounting the relevant cash flows (which include the initial up-front costs, the operating cash flows, and the terminal cash flows) at the company's cost of capital (WACC). Which of the following factors should the CFO include when estimating the relevant cash flows?
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B. Any interest expenses associated with the project.
C. None of the answers are correct.
D. Any opportunity costs associated with the project.
E. All of the answers are correct.
Answer: D
Explanation:
Explanation/Reference:
Explanation:
Sunk costs should be excluded from the analysis, and interest expense is incorporated in the WACC and not the cash flows.
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Aalk - 2014-05-05 16:45:18
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