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Testbank Question 103 Relevant cash flows for long-term decisions include: I. Revenues for new projects or...

Testbank Question 103

Relevant cash flows for long-term decisions include:
I. Revenues for new projects or services
II. Variable costs for new projects or services
III. Labour or electricity savings for replacement of old equipment

II and III only

I and III only

I and II only

I, II, and III
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Answer #1

Relevant cash flows for Long term decision include :

  1. Revenue and Variable cost of new projects or Service – This will definitely include as cash flow for Long term decision making .
  2. Labour or electricity savings for replacement of Old Equipment – this will be treated as Opportunity cost. This cost also be part of Long term decision .

So as per Question – I,II and III – both are applicable for long term decision

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