Assignment task: Capital project analysis
Question: Determine which of the following cash flows are incremental cash flows that should be incorporated into an NPV calculation. Explain in why or why not each example represents an incremental cash flow.
a. The annual depreciation expense on new equipment purchased for a project.
b. Rental income that was forgone from a previously unused warehouse owned by the company, which is now being used in a new product launch.
c. A dividend payment that was funded in part by a project's contribution to the net income for that year.