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 [or advertising expense * (1 ‒ tax rate)].

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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 [or advertising expense * (1 ‒ tax rate)]. This is because the tax savings from the advertising expense would reduce the amount of cash that the company would have to pay in taxes.

When Income Taxes Are Considered in Capital Budgeting, the Cash