According to the incremental cash flow principle, the firm should include:
A)taxes.
B)interest.
C)dividends.
D)a and b
E)a, b, and c

Question

Quizplus · Accepted Answer

Incremental cash flow refers to the additional cash flow a company will receive from undertaking a project. Taxes are included because they affect the net cash flow. Interest and dividends are financing flows and not considered in project cash flows as they do not directly affect the operational cash inflow or outflow of the project.

According to the Incremental Cash Flow Principle, the Firm Should