CFA Practice Question

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CFA Practice Question

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

A. because they are the simplest to identify.
B. only when the stand-alone principle fails to hold.
C. because ultimately it is the change in a firm's overall future cash flows that matter.
D. in order to accommodate unforeseen changes.
E. whenever sunk costs are involved.
Correct Answer: C

User Contributed Comments 4

User Comment
mattg Only incremental CFs matter!
johntan1979 Yup... cook the books all you like, cash is king!
ldfrench Johntan1979, I don't think a book would taste very good? (But I could be wrong) My favorite snack is carrots.
Znanje35 Baby carrots
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