What effects can capital-budgeting decisions have on a company? What effect does depreciation have on cash flow? Give an example of an out-of-pocket cost and a sunk cost by describing a situation in which both are encountered. A machine is being considered for purchase. The salesperson attempting to sell the machine says that it will pay for itself in five years. What is meant by this statement? What effects can capital-budgeting decisions have on a company? What effect does depreciation have on cash flow? Give an example of an out-of-pocket cost and a sunk cost by describing a situation in which both are encountered. A machine is being considered for purchase. The salesperson attempting to sell the machine says that it will pay for itself in five years. What is meant by this statement?