Relevant cash flow in capital budgeting decision

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Reference no: EM132071139

1. You are building a new factory. You bought the land two years ago for $100; you believe that it is now worth $150, but there are no known buyers for the property. The plant will cost $250 to build. You expect to buy $150 of equipment and spend $35 installing it. What is the amount of the initial investment for capital budgeting purposes?

A) $585

B) $250

C) $500

D) $535

E) $435

2. Which of the following is not a relevant cash flow in a capital budgeting decision

A) both positive and negative operating cash flows generated by the project

B) installation costs

C) sale of the asset at the end of the project

D) your original purchase price for a piece of equipment 2 years ago

Reference no: EM132071139

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