As a noncash expense,depreciation is irrelevant in the determination of a project's cash flows.

Question

Quizplus · Accepted Answer

Depreciation is an important factor in determining a project's cash flows as it affects the project's taxable income, which in turn affects the amount of taxes paid by the project. Depreciation reduces the amount of taxes paid, which results in an increase in cash flows. Therefore, depreciation is relevant in the determination of a project's cash flows.

As a Noncash Expense,depreciation Is Irrelevant in the Determination of a Project's