_____ cash flows are the cash flows of a firm with a project less the cash flows of the firm if the project were turned down.

Question

Quizplus · Accepted Answer

Incremental cash flows are the cash flows that result from a particular project, which are the cash flows earned or lost if the project is accepted or rejected. These cash flows are compared to the cash flows that would result if the project were not undertaken, which is also known as the opportunity cost of undertaking the project. Operating cash flows are the cash inflows and outflows directly related to a firm's core business activities, while sunk costs are costs that have already been incurred and cannot be recovered. Opportunity costs are the potential benefits that are forgone when one alternative is chosen over another.

_____ Cash Flows Are the Cash Flows of a Firm