The tax shield approach to computing the operating cash

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The tax shield approach to computing the operating cash flow, given a tax-paying firm:


i) separates cash inflows from cash outflows.

ii) is based on the fact that depreciation does not affect the operating cash flows.

iii) considers the changes in net working capital resulting from a new project.

iv) recognizes that depreciation creates a cash inflow.

v) ignores both interest expense and taxes.

Reference no: EM13479280

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