Under capital budgeting, the opportunity costs are cash outflows.
Under capital budgeting, it involves identifying the cash in flows and cash outflows rather than accounting revenues and expenses flowing from the investment. Thus, capital budgeting includes the opportunity cost, actual cost, relevant and incremental cash flows.
Opportunity costs are unseen, as such costs consider implicit costs. So these costs are not included in financial reports, and are often forgotten about in capital budgeting.
Thus, the cash outflows include principal interest and tax repayments which is associated with the project.
Hence, option A is correct.
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