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Why is the depreciation tax shield a component of analyzing investment decisions? Depreciation lowers income tax expense to be paid, though no cash flow occurs
Why is the depreciation tax shield a component of analyzing investment decisions?
Depreciation lowers income tax expense to be paid, though no cash flow occurs for the depreciation amount.
Depreciation creates cash flows that do not appear on the income statement.
Though no cash was paid out, depreciation was included on the tax return, which caused the company to have to pay taxes
on the amount of depreciation.
Depreciation causes a cash outflow that is added to determine net income.
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