1. What is the net present value?
a. the future value of a project’s cash flows plus its initial cost
b. the present value of a project’s cash flows plus its initial cost
c. the future value of a project’s cash flows minus its initial cost
d. the present value of a project’s cash flows minus its initial cost
2. Which of the following cash flows should not be considered relevant in calculating project cash flows?
a. opportunity costs
b. any effects caused by cannibalization
c. investments in net working capital as a result of making the investment
d. sunk costs