In capital budgeting analysis, a proposed project is typically evaluated based on cash flows. Since depreciation is non-cash expense, it is irrelevant in capital budgeting analysis. Is the statement true or false? Explain© BrainMass Inc. brainmass.com June 4, 2020, 12:20 am ad1c9bdddf
The statement is false. It is correct that a project is evaluated based on cash flows and depreciation is a non-cash expense. Depreciation affects the cash flows by reducing the amount of tax and so ...
The solution explains the relevance of depreciation in capital budgeting