The fact that a proposed project is analyzed based on the project's incremental cash flows is the assumption behind which one of the following principles?
A)underlying value principle
B)stand-alone principle
C)equivalent cost principle
D)salvage principle
E)fundamental principle

Question

Quizplus · Accepted Answer

The stand-alone principle assumes that a proposed project is analyzed based on its incremental cash flows, meaning that the project's cash flows should be evaluated independent of the cash flows of any other existing or potential projects. This principle is important in capital budgeting decisions, where projects are evaluated and selected based on their individual profitability and contribution to the overall value of the firm.

The Fact That a Proposed Project Is Analyzed Based on the Project's