Capital market imperfections cause a relevance of a project's contribution to the firm's total risk, e.g. because of costs of financial distress. Based on this observation Stulz (1999) argues that modern capital budgeting leads to an inappropriate assentment of the value of a project since only systematic risk is considered. I show that a project's contribution to total risk and the resulting indirect eect on the firm's value can and has to be considered without basically changing the established principle of modern capital budgeting.