Which of the following rules is CORRECT for capital budgeting analysis?

a. The interest paid on funds borrowed to finance a project must be included in estimates of the projects cash flows.

b. Only incremental cash flows, which are the cash flows that would result if a project is accepted, are relevant when making accept/reject decisions for capital budgeting projects.

c. Sunk costs are not included in the annual cash flows, but they must be deducted from the PV of the projects other costs when reaching the accept/reject decision.

d. A proposed projects estimated net income as determined by the firms accountants, using generally accepted accounting principles (GAAP), is discounted at the WACC, and if the PV of this income stream exceeds the projects cost, the project should be accepted.

e. If a product is competitive with some of the firms other products, this fact should be incorporated into the estimate of the relevant cash flows. However, if the new product is complementary to some of the firms other products, this fact need not be reflected in the analysis.