Emphasis on cash flows as opposed to net income

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Reference no: EM13806190

1. Operating cash flows, rather than accounting profits, are used in project analysis. What is the basis for this emphasis on cash flows as opposed to net income?

2. Explain why sunk costs should not be included in a capital budgeting analysis but opportunity costs and externalities should be included.

3. Explain how net operating working capital is recovered at the end of a projects life and why it is included in a capital budgeting analysis.

Reference no: EM13806190

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