Why do we use forecasted incremental after-tax free cash flows instead of forecasted accounting earnings in estimating

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Why do we use forecasted incremental after-tax free cash flows instead of forecasted accounting earnings in estimating the NPV of a project?

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Fundamentals of corporate finance

ISBN: 978-0470876442

2nd Edition

Authors: Robert Parrino, David S. Kidwell, Thomas W. Bates

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Question Posted: Jun 08, 2012 01:07 AM

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How do we calculate incremental after-tax free cash flows from forecasted earnings of a project? What are the common adjustment items?
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Why do we use forecasted incremental after-tax free cash flows instead of forecasted accounting earnings in estimating

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Accounting earnings can differ from cash flows for a ...View the full answer

Fundamentals of corporate finance

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