Depreciation is a non-cash deduction so it may be ignored in the calculation of a project's incremental after-tax cash flows.

Name: Depreciation is a non-cash deduction so it may be ignored in the calculation of a project's incremental after-tax cash flows.
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Question

Quizplus · Accepted Answer

Depreciation is a non-cash expense, but it still affects a company's taxes, which in turn affects its cash flows. Therefore, it cannot be entirely ignored when calculating a project's incremental after-tax cash flows.

Depreciation Is a Non-Cash Deduction So It May Be Ignored