The term ___________ refers to the fact that these cash flows reflect the amount by which the firm's total after-tax free cash flows will change if the project is adopted.

Question

Quizplus · Accepted Answer

Incremental cash flows refer to the difference between the cash flows a firm will earn with a new project and the cash flows it would have earned without the project. It takes into account only the additional or incremental cash flows generated by the project, meaning it reflects the amount by which the firm's total after-tax free cash flows will change if the project is adopted. The other options, periodic and ending cash flows, do not have a specific meaning related to incremental cash flows.

The Term ___________ Refers to the Fact That These Cash