The stand-alone principle focuses on the project's own cash flows, uncontaminated by cash flows from the firm's other activities.

Question

Quizplus · Accepted Answer

The stand-alone principle states that a project's financials should be evaluated based solely on the project's cash flows, without factoring in any external sources of cash. This principle ensures that the project is evaluated on its own merits, rather than being influenced by other factors such as the company's overall financial position or funding sources.

The Stand-Alone Principle Focuses on the Project's Own Cash Flows