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Flashcards in Topic 5 Deck (8)
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Sunk costs is a cost that has already been _____ and cannot be _______# incremental cash flow.

incurred, removed


The incremental cash flows for project evaluation consist of any and all _______in the firm’s _____cash flows that are a direct consequence of undertaking the project.

changes, future


The stand-alone principle is the _______of a project based on the project’s ________cash flows.

evaluation, incremental


Opportunity costs are the most valuable alternative that is given up if a particular investment is undertaken = ______ _______ _______.

incremental cash flow


Side effects -> erosion -> the cash flows of a ____ project that come at the expense of a firm’s existing projects = incremental cash flow.



Financing costs -> _____ ______ ______ used to discount the cash flows reflects, in part, the financing costs of the project = incremental cash flow.

the interest rate


An investment of the firm in the project’s ____ ______ ______ represents an additional cost of undertaking the investment.

net working capital


Always use _____ ______ _____ ______ , since taxes are definitely a cash flow.

after-tax incremental cash flow