A project's operating cash flow will increase when:
A) the depreciation expense increases.
B) the sales projections are lowered.
C) the interest expense is lowered.
D) the net working capital requirement increases.
E) the earnings before interest and taxes decreases.

Question

Quizplus · Accepted Answer

Depreciation is a non-cash expense that reduces net income but does not affect cash flows. As a result, an increase in depreciation will decrease net income and increase operating cash flows because less tax will be paid.

A Project's Operating Cash Flow Will Increase When