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Why is it that depreciation expense, which is not a cash flow, is included in the calculation of cash flows expected from undertaking a project?
Why is it that depreciation expense, which is not a cash flow, is included in the calculation of cash flows expected from undertaking a project? Select one: a. This is a convention adopted by financial managers prior to the wide spread understanding of the time value of money. b. Depreciation is the allocation of a fixed assets value over the period of time during which the asset is expected to provide benefits to the company. c. Depreciation is a deduction for tax purposes and thus depreciation impacts the amount of taxes paid which is a cash flow. d. Depreciation expense is not a cash flow, so therefore depreciation expense is not relevant to the project analysis. e. Rates of depreciation are determined by the tax code, which may not be logical in all respects because of the political process
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