In cash flow estimation, the existence of externalities should be taken into account if those externalities have any effects on the firm's long-run cash flows.

Question

Quizplus · Accepted Answer

Externalities, such as changes in regulations, competition, or market trends, can impact the future cash flows of a firm. Hence, those externalities should be considered while estimating cash flows.

In Cash Flow Estimation, the Existence of Externalities Should Be