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What is the key reason for measuring cash flows on an after-tax basis in capital budgeting?
  • a)
    To minimize tax liabilities
  • b)
    To simplify financial calculations
  • c)
    To calculate depreciation
  • d)
    To evaluate a project's present value accurately
Correct answer is option 'D'. Can you explain this answer?
Most Upvoted Answer
What is the key reason for measuring cash flows on an after-tax basis ...
Measuring cash flows on an after-tax basis in capital budgeting is essential because it allows for the evaluation of a project's present value accurately. This approach considers the cash flow that the company gets to keep after accounting for taxes, leading to more realistic financial assessments.
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What is the key reason for measuring cash flows on an after-tax basis in capital budgeting?a)To minimize tax liabilitiesb)To simplify financial calculationsc)To calculate depreciationd)To evaluate a project's present value accuratelyCorrect answer is option 'D'. Can you explain this answer?
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