A planning strategy that defers a tax cost without deferring the receipt of before-tax cash flows decreases the NPV of the transaction.

Question

Quizplus · Accepted Answer

Deferring a tax cost while still receiving before-tax cash flows can increase the Net Present Value (NPV) of the transaction because it allows the use of cash flows for investment or other purposes before taxes are paid, effectively reducing the cost of the transaction when the time value of money is considered.

A Planning Strategy That Defers a Tax Cost Without Deferring