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#cfa-level-1 #corporate-finance #reading-35-capital-budgeting #study-session-10
Cash flows are based on opportunity costs. What are the incremental cash flows that occur with an investment compared to what they would have been without the investment?
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3. BASIC PRINCIPLES OF CAPITAL BUDGETING
re often ignored because, if they are real, they should result in cash flows at some other time. Timing of cash flows is crucial. Analysts make an extraordinary effort to detail precisely when cash flows occur. <span>Cash flows are based on opportunity costs. What are the incremental cash flows that occur with an investment compared to what they would have been without the investment? Cash flows are analyzed on an after-tax basis. Taxes must be fully reflected in all capital budgeting decisions. Financing costs are ignored. This may se


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