Question

Project A has an initial investment of -255,852 and project B has an initial investment of -63,595. What is the incremental cash flow for time zero when evaluating this project?

Answer 1

If project A is chosen,incremental cash flow is -$192,257

If project B is chosen ,incremental cash flow is $192,257

Step-by-step explanation:

If the company chooses project A over project B, the incremental cash flow would the amount of money expended more or less because of the choice made,hence incremental cash flow would be $-192257 (-$255,852(-$63,595)).

However , if project is chosen instead incremental cash flow is $192,257 , in other words the company is saving $192,257 by opting for project B instead of A