In capital budgeting financing costs associated with incremental cash flows:

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Financing costs are typically captured in the project's discount rate (e.g., the weighted average cost of capital, WACC), which is used to discount future cash flows back to their present value. This approach ensures that the analysis focuses on the project's operational cash flows, while financing costs are accounted for in the calculation of the project's net present value (NPV) through the discount rate.

In Capital Budgeting Financing Costs Associated with Incremental Cash Flows