Question
Which of the following statements is correct? A. Capital budgeting for expansion and replacement projects is essentially the same because the types of cash flows
Which of the following statements is correct?
A. Capital budgeting for expansion and replacement projects is essentially the same because the types of cash flows involved are the same.
B. When equipment is sold, companies receive a tax credit as long as the salvage value is less than the initial cost of the equipment.
C. In estimating incremental operating cash flows for the purpose of capital budgeting, interest payments should not be included since the effects of these payments are already included in the rate of return the firm is required to earn from its investors.
D. If a firm has spent a large amount of money on the research and development of a new product, those costs should be included in the initial outlay of a capital budgeting analysis of whether to put the product into full production.
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