Question

The cash flows for a project include the:_______.a. net income generated by the project plus the annual depreciation expense. b. sunk costs, opportunity costs, and erosion costs of the project. c. incremental operating cash flow, as well as the capital spending and net working capital requirements. d. net operating cash flow generated by the project, less both sunk cost and erosion costs.

Answer 1

Answer: c. incremental operating cash flow, as well as the capital spending and net working capital requirements

Explanation:

During financial planning for projects, understanding the inflows and outflows of cash which will be created by the project is important. The cash flows for a project include the incremental operating cash flow, and the capital spending and net working capital requirements

The incremental cash flow is an additional operating cash flow which an organization receives from doing a new project. Capital spending is the money an organization spends to purchase, maintain, and improve its fixed assets, like vehicles, land, buildings, or equipment.