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In Capital Budgeting, "incremental cash flow" means:
ATotal cash flow of the project
BOpportunity cost only
CSunk costs
DAdditional cash flow attributable to the project (with vs without)
Answer & Solution
Correct answer: D. Additional cash flow attributable to the project (with vs without)
1. Incremental cash flow = additional CF the firm would have only if the project is undertaken.
2. Excludes sunk costs; includes opportunity costs and side-effects.
3. Foundation principle of capital budgeting analysis.
_Source: ICAI BoS CA Inter Paper 6A, Ch 7 "Investment Decisions", §5 — Cash flows_