Net Cash Flow

C

Incremental cash flow is defined as the net cash flow attributable to an investment project.

The correct answer to the question is C. Incremental Cash Flow.

Incremental cash flow refers to the net cash flow that is directly attributable to a particular investment project. It represents the difference between the cash flows with the project and the cash flows without the project. In other words, it measures the additional cash flows generated by undertaking the investment.

Here's a detailed explanation of the other answer choices:

A. Sunk Cost: Sunk costs are costs that have already been incurred and cannot be recovered. They are not relevant in investment decision-making because they are unrelated to future cash flows. Sunk costs are not included in the incremental cash flow.

B. Opportunity Cost: Opportunity cost refers to the value of the next best alternative foregone when making a decision. It represents the potential benefit that is sacrificed by choosing one option over another. While opportunity cost is an important concept in decision-making, it is not the term used to describe the net cash flow of an investment project.

D. Cannibalization: Cannibalization occurs when a new product or service decreases the sales or demand for an existing product or service within the same company. It refers to the negative impact on existing cash flows caused by the introduction of a new product or service. Cannibalization is not synonymous with the net cash flow of an investment project.

E. Externality: An externality refers to the impact of a decision or action on parties not directly involved in the transaction. It can be positive (beneficial) or negative (harmful). While externalities can have an effect on cash flows, they do not represent the net cash flow attributable to an investment project.

In summary, the term that specifically represents the net cash flow attributable to an investment project is C. Incremental Cash Flow.