Which of the following is not true capital budgeting?Incremental cash flows are consideredOpportunity costs are excludedRelevant cash flows are consideredSunk costs are ignored (2024)

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A

Incremental cash flows are considered

B

Sunk costs are ignored

D

Relevant cash flows are considered

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Solution

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Capital budgeting decisions involve huge funds and are long term decisions. As they involve huge costs one wrong decision would have a big effect on the business. They include all the potential expenses/costs. It includes opportunity cost, actual cost, incremental and relevant cash flows. It does not include sunk costs.

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Which of the following is not true capital budgeting?Incremental cash flows are consideredOpportunity costs are excludedRelevant cash flows are consideredSunk costs are ignored (2024)
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