If an investment project generates tax-deductible expenses, cash inflows from the project will be reduced by the taxes resulting from the increase in income taxes payable.

Question

Quizplus · Accepted Answer

Tax-deductible expenses actually reduce the taxable income, which in turn lowers the amount of taxes payable, potentially increasing the net cash inflows from the project.

If an Investment Project Generates Tax-Deductible Expenses, Cash Inflows from the Project