Relevant cash flow

Investment appraisal includes future incremental receipts and payments caused by the project, including effects on existing business. A past payment is sunk and cannot be changed by the decision. An accounting allocation is irrelevant unless total cash expenditure changes. Opportunity costs are relevant when using a resource sacrifices an alternative cash benefit. Depreciation itself is not a cash payment, but associated tax relief can affect cash flows. Financing payments are normally excluded from project cash flows when financing costs are already represented by the discount rate; APV separates financing effects explicitly.