In measuring cash flows we are interested only in the incremental or differential after-tax cash flows that are attributed to the investment proposal being evaluated.

Question

Quizplus · Accepted Answer

This statement is true. When evaluating an investment proposal, we are only interested in the after-tax cash flows that are directly attributable to the proposal, rather than any cash flows that might occur regardless of the investment. These incremental cash flows are the ones that will be impacted by the decision to invest or not, and are therefore the key focus of the analysis.

In Measuring Cash Flows We Are Interested Only in the Incremental