Depreciation is a noncash expense but it is taxdeductible on the income statement Thus depreciation causes taxes paid an actual cash outflow to be reduced by an amount equal to the depreciation tax shield tcD A reduction in taxes that would otherwise be paid is the same thing as a cash inflow so the effects of the depreciation tax shield must be added in to get the total incremental aftertax cash flows

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What is a NonCash Charge and how does it work A writedown or accounting expense that does not entail a cash payment is referred to as a noncash charge They can indicate significant changes in a compan... View the full answer