The after-tax net present value of a project is affected by

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The after-tax net present value (NPV) of a project is the present value of all cash inflows and outflows adjusted for taxes. Tax-deductible cash flows are those that reduce the taxable income of the project, which in turn reduces the tax payable. Non-tax-deductible cash flows are those that do not reduce taxable income and are taxed at the applicable rate, which reduces the net cash inflows. Accounting accruals are non-cash items that affect the accounting profit but not the cash inflows and outflows of a project. These accruals do not affect the after-tax cash flows and hence do not affect the after-tax NPV of the project. Thus, all the given factors affect the after-tax NPV of a project.

The After-Tax Net Present Value of a Project Is Affected