Question
which of the following is incorrect? When calculating net present value, sunk costs should not be included as they have no future cost. Assume that
which of the following is incorrect?
When calculating net present value, sunk costs should not be included as they have no future cost.
Assume that you are considering twomutually-exclusiveprojects that have different lives. The projects areall-costprojects (i.e., do not generate revenues or savings of cash but involve necessary equipment). One appropriate way to choose between the projects is to select the project with the lowest equivalent annual cost (EAC).
The Net present value generally is found by subtracting the required investment from the present value of future cash flows.
You should include interest payments when calculating a project's cash flow.
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