How are company taxes treated in estimating cash flows for a project?
A)They are ignored.
B)They are treated as cash inflows.
C)They are treated as cash outflows.
D)None of the given options.

Question

Quizplus · Accepted Answer

Company taxes are considered as cash outflows for a project as they directly reduce the cash available for the project. The taxes paid by the company need to be deducted from the project's cash inflows to estimate the net cash inflows. Ignoring taxes in cash flow estimation can result in overestimation of the project's profitability.

How Are Company Taxes Treated in Estimating Cash Flows for a Project