Chapter Net Present Value and Capital Budgeting 7.2.4 Net working capital 7.2.5 Financing costs Some conclusions of incremental cash flows When we estimate cash flows on an incremental basis, we should learn by heart that Do not confuse average with incremental payoffs Include all incidental effects Do not forget working capital requirements Include opportunity costs. Forget sunk costs Beware of allocated overhead costsChapter 7 Net Present Value and Capital Budgeting 7.2.4 Net working capital 7.2.5 Financing costs Some conclusions of incremental cash flows When we estimate cash flows on an incremental basis, we should learn by heart that • Do not confuse average with incremental payoffs. • Include all incidental effects • Do not forget working capital requirements. • Include opportunity costs. • Forget sunk costs • Beware of allocated overhead costs