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#cfa-level-1 #corporate-finance #reading-35-capital-budgeting #study-session-10
Accounting net income also differs from economic income, which is the cash inflow plus the change in the market value of the company.
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3. BASIC PRINCIPLES OF CAPITAL BUDGETING
as accounting depreciation. Furthermore, to reflect the cost of debt financing, interest expenses are also subtracted from accounting net income. (No subtraction is made for the cost of equity financing in arriving at accounting net income.) <span>Accounting net income also differs from economic income, which is the cash inflow plus the change in the market value of the company. Economic income does not subtract the cost of debt financing, and it is based on the changes in the market value of the company, not changes in its book value (accounting depreciation


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