theory, capital budgeting decisions should depend solely on forecasted cash flows and the opportunity cost of capital The decision criterion should not be affected by managers' tastes, choice of accounting method, or the profitability of other independent projects.

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According to financial theory, capital budgeting decisions should only consider forecasted cash flows and the cost of capital, and should not be influenced by managerial preferences, accounting methods, or the profitability of other unrelated projects.

Theory, Capital Budgeting Decisions Should Depend Solely on Forecasted Cash