Chapter Net Present Value and Capital Budgeting The concept of incremental cash flow is central to our analysis, so we will state a general definition and refer back to it The incremental cash flows for project evaluation consist of any and all changes in the firm's future cash flows that are a direct consequence of taking the project. 7.1.2 The stand-alone principle Once we identify the effect of undertaking the proposed project on the firms cash flows, we need only focus on the projects resulting incremental cash flows. this is called the stand-alone principle. The stand-alone principle refers to the rule that evaluation of a project based on the projects incremental cash flowsChapter 7 Net Present Value and Capital Budgeting • The concept of incremental cash flow is central to our analysis, so we will state a general definition and refer back to it : The incremental cash flows for project evaluation consist of any and all changes in the firm’s future cash flows that are a direct consequence of taking the project. 7.1.2 The stand-alone principle Once we identify the effect of undertaking the proposed project on the firm’s cash flows, we need only focus on the project’s resulting incremental cash flows.this is called the stand—alone principle. The Stand—alone principle refers to the rule that evaluation of a project based on the project’s incremental cash flows