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Message: <blockquote data-quote="acne" data-source="post: 14277141" data-attributes="member: 343300">Thank you for your explanation FD and opportunity cost I've forgotten about it.so does depreciation but i think we don't deduct it. (correct me if i'm wrong) But why this cash doesn't go out from the business.Here is the questionA company is evaluating an investment of $20000. The investment qualify for tax depreciation at 20% reducing balance method. The asset can be sold for 15,000 at the end of the 3rd year. corporate tax rate is 30% and taxes are paid in 2 installments that is half of the tax in the year it arises and the balance in the following year.                                    The project is expected to generate net cash flows of 3000,10000, and 15000 in the next 3 years. The group company makes enough profits so that they can realize tax savings through losses using coc of 10% Evaluate the investment?we were taught to take tax savings as cash inflow? my problem is the company didn't receive money from any external party. They made a loss and because of that the amount they should pay as tax was reduced. i don't see any inflow of cash<img src="/styles/default/xenforo/smilies/default/nerd.gif"  class="smilie" loading="lazy" alt=":nerd:" title="Nerd    :nerd:" data-shortname=":nerd:" /></blockquote>

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