Depreciation charges
A)are not relevant in capital budgeting decisions, because they are not discounted.
B)are not relevant because they are not cash flows.
C)are considered an element of cash flows, and are thus relevant.
D)affect the ending balance of operating income, and are thus relevant.
E)are relevant because they relate to capital items.

Question

Quizplus · Accepted Answer

Depreciation charges are not relevant in capital budgeting decisions because they do not represent actual cash flows. Capital budgeting focuses on cash inflows and outflows, and since depreciation is a non-cash expense, it does not directly impact the cash flow analysis.

Depreciation Charges