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In terms of capital budgeting projects, which cash flows should be incrementally applied to a project...

In terms of capital budgeting projects, which cash flows should be incrementally applied to a project and which ones should not be applied? How does accelerated depreciation affect project cash flows?

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In capital budgeting of project, all the cash flows which are operating in nature should always be discounted and all the cash flows which are non operating in nature should not be taken into account for Capital budgeting decision.

cash flows which are directly impacting the project and which can easily be ascertained by the company are to be adjusted incrementally to the project whereas those cash flows which are not easily ascertained by the company and non operating cash flows like interest and other expenses which are not relevant for the capital budgeting decision will not be applied to them.

it can also be said that opportunity cost is not also taken into account while making a capital budgeting decision

Accelerated depreciation will be affecting the cash flows because when a higher amount of accelerated depreciation is applied the cash flows of the company will be going up because depreciation are tax exempt in nature so a higher amount of depreciation will be leading to a higher amount of taxable value of depreciation in initial years and it will increasing the value of the cash flow of the firm.

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