A project's after-tax net present value is increased by all of the following except

Question

Quizplus · Accepted Answer

Revenue accruals do not increase the after-tax net present value of a project because they represent revenue that has been earned but not yet received. The net present value of a project is based on cash flows, so only cash inflows and depreciation deductions (which reduce taxable income and therefore taxes owed) can increase the after-tax net present value. Expense accruals also do not increase the after-tax net present value because they represent expenses that have been incurred but not yet paid, and therefore do not affect cash flows.

A Project's After-Tax Net Present Value Is Increased by All