FIN.6:10 - Architectural Rationale

The difference between alternatives identifies what the present choice changes. The earnings-to-cash bridge locates payment and tax effects; discounting then compares their value across dates. Keeping these operations separate makes a wrong baseline or an omitted cash effect visible before a precise NPV disguises it.

A project account is a causal comparison as well as a set of quantities. If the baseline would lose the same customer or incur the same payment, attributing that whole effect to the proposal misstates its contribution. If the proposal changes another product or resource use, restricting the account to the sponsor’s cost center loses a real consequence. The economic boundary follows the decision’s effects, while FIN.1 preserves the corporation and claimant perspective.

Discounting expresses the value trade-off over time; it does not provide money on the payment date. A precise positive NPV can coexist with an insolvent implementation schedule. Nor does a fixed-project NPV settle whether waiting or making a smaller initial commitment is better. FIN.2, FIN.8 and FIN.9 supply those actual missing comparisons. Additional measures are useful when their own question is explicit, rather than as unexplained votes to be averaged with NPV.