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[Solved] In capital budgeting which of the following is used as a cap[Solved] Which one of the following methods of Capital Budgeting assuRelevant costsWhich of the following is not true with reference to capital budgeting?Capital budgeting is related to asset replacement decisionsCost of capital is equal to minimum required returnExisting investment in a project is not treated as sunk costTiming of cashA Incremental cash flows are considered B Sunk costs are ignored C Opportunity costs are excluded D Relevant cash flows are considered
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Solution
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Capital budgeting decisions involve huge funds and are long term decisions. As they involve huge costs one wrong decision would have a big effect on the business. They include all the potential expenses/costs. It includes opportunity cost, actual cost, incremental and relevant cash flows. It does not include sunk costs.
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