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Which one of the following should not be included when calculating the initial project cost? purchase price of asset installation costs increases in net working
Which one of the following should not be included when calculating the initial project cost?
- purchase price of asset
- installation costs
- increases in net working capital
- sunk costs
- freight costs
All of the following describe the Internal Rate of Return method except:
- measures how much shareholder dollar wealth will increase.
- similar to the yield-to-maturity of a bond.
- the discount rate that makes NPV = 0.
- is a comparison method in that one compares the IRR with a hurdle rate.
When evaluating a capital budgeting project the change in net working capital must be considered as part of
a. the operating cash inflows.
b. the initial investment.
c. the incremental operating cash inflows.
d. the operating cash outflows.
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