\"Which of the following rules are essential to successful cash flow estimates,

Question

"Which of the following rules are essential to successful cash flow estimates, and ultimately, to successful capital budgeting?"

The return on invested capital is the only relevant cash flow.

Only incremental cash flows are relevant to the accept/reject decision.

Total cash flows are relevant to capital budgeting analysis and the accept/reject decision.

All of the above are correct.

The return on invested capital is the only relevant cash flow.

Only incremental cash flows are relevant to the accept/reject decision.

Total cash flows are relevant to capital budgeting analysis and the accept/reject decision.

All of the above are correct.

Explanation / Answer

the correct answer would be `only incremental cash flows are relevant to accept/reject decision

why because incremental cash flows are net cash flows attributable to an investment project and are the only cash flows relevant in capital budgeting

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