When analysing capital expenditure proposals, if a firm is interested in cash inflows and cash outflows, depreciation resulting from the expenditure would always be treated as a cash outflow.

Question

Quizplus · Accepted Answer

Depreciation is a non-cash expense and is not included in cash flows, therefore it would not be treated as a cash outflow when analysing capital expenditure proposals.

When Analysing Capital Expenditure Proposals, If a Firm Is Interested