Any cash flow that can be classified as incremental to a particular project is relevant in a capital budgeting analysis.

Question

Quizplus · Accepted Answer

Any cash flow that is incremental or related to a particular project is relevant in a capital budgeting analysis because it will affect the decision to undertake the project or not. Non-incremental cash flows, such as sunk costs or overhead costs, are not relevant because they will not change as a result of the project.

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