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All of the following are related to a proposed project. Which one of these should be included in the cash flow at Time 0?A) Loan obtained to finance the projectB) Initial investment in inventory to support the projectC) Annual depreciation tax shieldD) Aftertax salvage valueE) Net working capital recovery

Respuesta :

The correct answer is choice A, a loan obtained to finance the project.

When you are calculating cash flow you are calculating the inflows and outflows of actual liquid cash. The only one of the options that would be considered cash at time 0 is the loan that was obtained to finance the project.

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