Describe the reasoning behind the focus on cash flows

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Explain the reasoning behind the focus on cash flows rather than accounting profits in making our capital-budgeting decisions. Why are we interested only in incremental cash flows rather than total cash flows?

If depreciation is not a cash flow item, why does it affect the level of cash flows from a project in any way?

What makes up a company's capital structure? Explain the purpose of determining the weighted average cost of capital for a company.

Reference no: EM1349808

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