The net cash flow of a project is equal to any increase in revenues brought about by the project less any increase in operating expenses and depreciation brought about by the project, plus the incremental depreciation associated with the project.

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Net cash flow of a project is equal to any increase in revenues minus any increase in operating expenses, but depreciation is not subtracted because it is a non-cash expense. Instead, the tax shield benefit of depreciation is often added back to calculate cash flows.

The Net Cash Flow of a Project Is Equal to Any