Depreciation expenses affect capital budgeting analysis by increasing

Question

Quizplus · Accepted Answer

Depreciation is a non-cash expense that reduces the reported earnings of a company, which in turn lowers its taxable income. As a result, depreciation expenses increase the after-tax cash flows, making them a relevant factor in capital budgeting analysis. The other options - taxes paid, initial outlay, and working capital - are not directly impacted by depreciation expenses.

Depreciation Expenses Affect Capital Budgeting Analysis by Increasing