Taxes are paid each year on some measure of financial gain. We typically think of financial gain
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Taxes are paid each year on some measure of financial gain. We typically think of financial gain as ‘‘cash inflows minus cash outflows,’’ and yet simply subtracting outflows due to capital investments in plant and equipment that will be used over multiple years is not allowed.
a. Why are these outflows not allowed to just be subtracted?
b. Where do depreciation allowances fit into the tax picture, especially since they are not cash flows?
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a One reason is that US Tax Law prohibits simply s...View the full answer
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Related Book For
Principles Of Engineering Economic Analysis
ISBN: 9781118163832
6th Edition
Authors: John A. White, Kenneth E. Case, David B. Pratt
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