When income taxes are considered in capital budgeting,the cash flows related to a company's advertising expense would be correctly figured by taking the cash paid for advertising and subtracting the result of multiplying [advertising expense * (1 _- tax rate)].

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This statement is correct. When calculating the cash flows related to advertising expenses, the after-tax cost of advertising should be taken into account. This can be calculated by taking the advertising expense and multiplying it by the difference between the current and previous tax rates, then subtracting this amount from the cash paid for advertising.

When Income Taxes Are Considered in Capital Budgeting,the Cash Flows