General Studies · Capital Budgeting Cash Flows
In the context of a Net Present Value (NPV) evaluation for a gym refurbishment project, classify which of the following items represent relevant and irrelevant cash flows: 1. Investment of $450,000 in the new equipment2. Non-cash accounting depreciation of $90,000 per year3. Incremental staff training costs of $20,0004. General apportioned overhead costs of $4,0005. Past marketing research costs of $3,0006. General corporate interest financing costs of $6,000 per year (handled via discount rate)
Verified Solution4 OptionsUpdated: October 2026👁️1 View
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- 1Relevant = 1, 3; Irrelevant = 2, 4, 5, 6✓
- 2Relevant = 2, 4, 5, 6; Irrelevant = 1, 3
- 3Relevant = 1, 5; Irrelevant = 2, 3, 4, 6
- 4Relevant = 3, 6; Irrelevant = 1, 2, 4, 5
Correct answer
Relevant = 1, 3; Irrelevant = 2, 4, 5, 6
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