intangible costs and benefits are often ignored because, if they are real, they should result in cash flows at some other time.
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3. BASIC PRINCIPLES OF CAPITAL BUDGETING ting relies on just a few basic principles. Capital budgeting usually uses the following assumptions:
Decisions are based on cash flows. The decisions are not based on accounting concepts, such as net income. Furthermore, <span>intangible costs and benefits are 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.
Cash flows are based on opportunity cos
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