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Hi Mr John I’m finding it hard to understand relevant and irrelevant cost…I can’t answer questions about this topic…Thank you?..
It is needed for investment appraisal DCF questions.
The relevant costs are all future, extra, cash costs.
Money that has already been spent is not relevant.
Any non-cash items (such as depreciation) are not relevant.
Finally, it is the extra (incremental) costs to the company of doing the project that matter.
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