Why is it generally incorrect to consider interest charges when comput
QUESTION
Why is it generally incorrect to consider interest charges when computing a projects net cash flows?
eady considered while calculating the cost of debt which is included in the weighted average cost of capital. The interest payments are not included in the calculation of projects net cash flows because their inclusion will lead to double counting of the interest expense. It is therefore incorrect to consider interest charges while calculating projects net cash flows.
ANSWER:
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