It is possible with a replacement project that the incremental depreciation cash flows will be negative even if the actual depreciation on the new asset is positive.

Question

Quizplus · Accepted Answer

This can happen if the incremental increase in operating cash flows from the new asset is not sufficient to cover the higher depreciation expense. In other words, the additional revenue or cost savings from the replacement project may not be enough to offset the higher depreciation expense, resulting in a negative net cash flow from depreciation.

It Is Possible with a Replacement Project That the Incremental