In the net present value (NPV)method,pre-tax cash flows should be used instead of after-tax cash flows when taxes are a consideration.

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In the NPV method, after-tax cash flows should be used when taxes are a consideration. This is because taxes are based on net income, which is calculated as revenue minus expenses including taxes paid. Using pre-tax cash flows would overstate the cash available for other purposes and may lead to incorrect investment decisions.

In the Net Present Value (NPV)method,pre-Tax Cash Flows Should Be