Any cash flows that can be classified as incremental to a particular project¾i.e., results directly from the decision to undertake the project¾should be reflected in the capital budgeting analysis.

Question

Quizplus · Accepted Answer

It is important to include all cash flows that are directly attributed to a project in the capital budgeting analysis as these are considered incremental cash flows. This helps in determining the net present value (NPV) and internal rate of return (IRR) of the project accurately, which aid in making informed investment decisions.

Any Cash Flows That Can Be Classified as Incremental to a Particular