Depreciation is important in calculating projected cash flows because it generates a tax deduction.

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Depreciation is a non-cash expense that reduces the taxable income of a business, generating a tax deduction. This tax deduction reduces the amount of taxes a company has to pay, which in turn increases the company's cash flows. Therefore, depreciation is important in calculating projected cash flows because it directly affects the tax liability of a business.

Depreciation Is Important in Calculating Projected Cash Flows Because It