7-6 Incremental Cash Flows s Discount incremental cash flows s Include all indirect effects o Forget Sunk costs S Include Opportunity Costs S Recognize the Investment in Working Capital s Beware of Allocated Overhead Costs Incremental cash flow cash flow Cash Flow with project without project Irwin/McGraw-Hill CThe McGraw-Hill Commpanies, Inc, 2001©The McGraw-Hill Companies, Inc.,2001 7- 6 Irwin/McGraw-Hill Incremental Cash Flows Discount incremental cash flows Include All Indirect Effects Forget Sunk Costs Include Opportunity Costs Recognize the Investment in Working Capital Beware of Allocated Overhead Costs Incremental Cash Flow cash flow with project cash flow = without project -