FINANCING COSTS, THAT IS INTEREST AND DIVIDEND PAYMENTS, ARE EXCLUDED AS CASH FLOWS IN NPV CALCULATIONS BECAUSE:

A) TEHRE ARE MULTIPLE WAYS TO OBTAIN FINANCING AND IT IS TOO DIFFICULT TO ESTIMATE FINANCING COSTS OVER THE LIFE OF THE PROJECT

B) FINANCING COSTS ARE NOT INCLUDED IN CASH FLOW STATEMENTS (IE. THEY ARE NON CASH CHARGES) AND THEREFORE DO NOT BELONG IN NPV CALCULATIONS

C) THE DISCOUNT RATE, K, IMPLICITLY INCLUDES FINANCING COSTS, AS SUCH, IT IS NOT CORRECT TO INCLUDE FINANCING COSTS AS CASH FLOWS

D) FINANCING COSTS ARE SUNK COSTS, AND HENCE ARE NOT INCLUDED

E) FINANCING COSTS ARE INCLUDED IN PROJECTS, BUT ONLY IF THE FIRM ISSUES NEW EQUITY