Differentiate between sunk costs and opportunity costs

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1. Why must incremental, after-tax, cash flows, rather than total cash flows, be evaluated in project analysis?

2. Differentiate between sunk costs and opportunity costs. Which of these costs should be included in incremental cash flows and which should be excluded?

3. Why is it important to consider cannibalization in situations where a company is considering adding substitute products to its product line?

Reference no: EM131328597

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