12-1 Operating cash flows rather than accounting income are listed. Why do we focus on cash flows as opposed to net income in capital budgeting?

12-2 Explain why sunk costs should not be included in a capital budgeting analysis but opportunity costs and externalities should be included. Give an example of each.

12-3 Explain why net operating working capital is included in a capital budgeting analysis and how it is recovered at the end of a projects life.

12-4 Why are interest charges not deducted when a projects cash flows for use in a capital budgeting analysis are calculated?