A relevent cash flow is a future incremental cash flow. Relevant cash flow that arice from the following decisions must be considered in making a short-term decision.
FUTURE
- only future CF that that occur as a result of the decisions should be considered.
- sunk and commited costs should be ignored.
- only extra cash flow that inccur as a result of the decision must be considered.
- FC must be ignored unless there is a increment cost attached 2 it.
- Oppurtunity costs should be included.
- Only cash items are relevent to the decision
- depreciation is not relevent.
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