In computing the NPV of a capital budgeting project, one should NOT: Select one: A. estimate...
In computing the NPV of a capital budgeting project, one should NOT: Select one:
A. estimate the cost of the project.
B. discount the future cash flows over the project's expected life.
C. ignore the salvage value.
D. make a decision based on the project's NPV.
Homework Answers
While computing NPV, all the relevant cash flows must be considered. After-tax salvage value of the machine is relevant cash flow so it must be considered in NPV evaluation.
Hence, correct option is C
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