When evaluating a project for a capital budgeting decision, taxes are an important consideration. If we assume, for end-of-project sale or salvage that an asset is sold for more than than its book value it is a taxable event. The estimated taxes on this transaction: are treated as a reduction in cash and added to operating cash flow O are treated as an increase in cash and added to cash flow are treated as a reduction in cash and deducted from the book value of the asset are treated as a reduction in cash and deducted from the taxable gain are treated as a reduction in cash and are deducted from the sale price