Does anyone know from which question bank this question comes from? Someone posted it here on the analystforum many years ago. Is this from the CFA website practice area?
Which of the following statements describes the most appropriate treatment of cash flows in capital budgeting?
A) A project is evaluated using its incremental cash flows on an after-tax basis.
B) Interest costs are included in the project’s cash flows to reflect financing costs.
C) Sunk costs and externalities should not be included in the cash flow estimates.