#analyst-notes #cfa-level-1 #corporate-finance #reading-35-capital-budgeting #study-session-10
only measure the return on the invested capital. Accounting income calculations reflect non-cash items and ignore the time value of money. They are important for some purposes, but for capital budgeting, cash flows are what are relevant.
is an investment's after-tax cash flow plus the change in the market value. Financing costs are ignored in computing economic income.