What is incremental cash flow and how is it used in project analysis?

What is incremental cash flow and how is it used in project analysis?

Incremental cash flow represents the difference between the cash flows if a project is taken on versus what they will be if the project is not undertaken. When conducting project analysis, the focus should be on incremental cash flow. The concern is over “what is different” if the project is selected and how the project adds value to the firm.

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