A projects depreciation expense must be considered when evaluating its incremental operating

Question

A project's depreciation expense must be considered when evaluating its incremental operating cash flows because:

a. depreciation represents a tax-deductible cash expense.

b. the firm incurs a cash payment equal to the depreciation expense each year.

c. depreciation has an impact on the taxes paid by the firm, which is a cash flow.

d. depreciation is a sunk cost.

e. depreciation is a fixed cash payment that the firm receives each year.

Answer

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