Author Question: Depreciation is usually NOT considered an operating cash flow in capital budgeting because ________. (Read 75 times)

panfilo · **on:** Mar 6, 2021

Question 1

An example of a sunk cost in a capital budgeting decision for new equipment is ________.
◦ the initial investment in working capital
◦ the original price of an old equipment
◦ the necessary transportation costs on a new equipment
◦ the initial investment in a new equipment

Question 2

Depreciation is usually NOT considered an operating cash flow in capital budgeting because ________.
◦ depreciation is usually a constant amount each year over the life of the capital investment
◦ deducting depreciation from operating cash flows would be counting the lump-sum amount twice
◦ depreciation usually does not result in an increase in working capital
◦ depreciation usually has no effect on the disposal price of the machine

taylorsonier · **Reply #1 on:** Mar 6, 2021

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