# on 07-Aug-2017 (Mon)

#### Flashcard 1438338125068

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Question

How should be negative externalities cash flows treated in the capital budget?

They should be subtracted since they are not incremental

status measured difficulty not learned 37% [default] 0

#### Parent (intermediate) annotation

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#13; Future cash flows represented by negative externalities occur regardless of the project, so they are non-incremental. Such cash flows represent a transfer from existing projects to new projects, and thus should be <span>subtracted from the new projects' cash flows.<span><body><html>

#### Original toplevel document

Subject 2. Basic Principles of Capital Budgeting