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Incremental cash flow is basically the relevant cash flows for a project that is additional and can be expected to be spent if the company implements the project.
Incremental cash flow does not normally include sunk cost, but it does include opportunity cost and externalities.
Sunk cost is cash outlays that have been made and that cannot be recouped. Whether the project being analyzed is going to take place or not, the cash cannot be re-gained. It is already spent and future cash flow is not affected anymore.
Opportunity cost is the future cash flows forgone by using an asset if a company chose to do the project...
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