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    Importance of incremental cash flows in capital investment decisions

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    It is important to identify and use only incremental cash flows in capital investment decisions:

    a. Because ultimately it is the change in a firm's overall future cash flows that matter.

    b. Because they are the simplest to calculate.

    c. To accommodate unforeseen changes that might occur.

    d. Only when the stand-alone principal fails to hold.

    e. Whenever sunk costs are involved.

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    https://brainmass.com/business/cash/why-is-it-important-to-use-only-incremental-cash-flows-in-capital-investment-decisions-253879

    Solution Summary

    The importance of incremental cash flows in capital investment decisions are given.

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