What are the different types of cash flows considered in capital budgeting analysis?

The different types of cash flows considered in capital budgeting analysis are:

1. Initial Investment: This refers to the cash outflow required to acquire or start a project or investment.

2. Operating Cash Flows: These are the cash inflows and outflows generated by the project during its operational life. It includes revenues, expenses, and taxes.

3. Terminal Cash Flows: This represents the cash inflows or outflows that occur at the end of the project's life, such as the sale of assets or the salvage value.

4. Incremental Cash Flows: These are the additional cash flows generated by the project compared to the existing or alternative investment options. It considers the difference in cash flows between the project and the next best alternative.

5. Sunk Costs: These are the costs that have already been incurred and cannot be recovered. They are not considered in capital budgeting analysis as they are irrelevant to future decision-making.

6. Opportunity Costs: These are the potential benefits or cash flows that are foregone by choosing one investment option over another. They represent the value of the best alternative investment not chosen.

7. Externalities: These are the indirect effects or external impacts of the project on other cash flows or investments. They can be positive or negative and should be considered in the analysis.

It is important to consider all these types of cash flows to accurately evaluate the profitability and feasibility of a capital budgeting project.