增量现金流也称为相关现金流量，是指公司有无被决策项目时未来现金流量的差值，也就是由决策引起的公司总未来现金流量的变化。
　　显然，在计算投资项目的净现值的时候，只有增量现金流是有意义的。例如，某公司两年前曾打算开发某产品，曾支付10万元的咨询费，但由于种种原因项目未能继续下去。现在旧事重提，在进行投资分析时这笔费用是否是相关成本呢?答案是否定的。在任何一个阶段，以前支付的费用都是沉没成本，因此，在决策过程中的每一阶段，只有未来的成本和收人才是与决策相关的。增量现金流量的概念听起来很容易理解，但在实际计算过程中很容易出错。一个简单的办法是，假设可能出现的两种情况：在第一种情况下项目被采纳；在第二种情况下项目被拒绝。在这两种情况下都会发生的现金流量是不相关的现金流量，因此与投资决策无关；只有在第一种情况下才会发生的现金流量就是增量现金流量，与决策有关。

expected incremental cash flows include taxes, all incremental effects, cash flows, changes in working capital, salvage value of any assets

salvage value

The straight line method of depreciation is the simplest method of depreciation. Using this method, the cost of a tangible asset is expensed by equal amounts each period over its useful life. The idea is that the value of the assets declines at a constant rate over its useful life. This method is approved by GAAP.

A capital allowance is the amount of expenditure that a British business may claim against its taxable profit under the Capital Allowances Act.

Under reducing balance method, the depreciation is charged at a fixed rate like straight line method (also known as fixed installment method). But the rate percent is not calculated on cost of asset as is done under fixed installment method - it is calculated on the book value of asset. The book value of an asset is obtained by deducting depreciation from its cost. The book value of asset gradually reduces on account of charging depreciation. Since the depreciation rate per cent is applied on reducing balance of asset, this method is called reducing balance method or diminishing balance method. The calculation of depreciation under this method will be clear from the following example.