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<p><strong>(a) Tax Shield of Depreciation </strong></p> <p><strong>(b) After-tax Operating Profits</strong></p> <p><strong>(c) Raising of Funds </strong></p> <p><strong>(d) Both (a) and (b)</strong></p> <p> </p>
D) Both (a) & (b)
Agree with the answer by Muhammad Salman
D - is the answer
The answer is (d)
According to relevant costing principles the incremental cashflows and cost savings generated from a project are all considered cash inflows. capital allowances (tax shield) on tax depreciation and after tax operating profits generated by the project are thus both considered to be relevant cash inflows.
The raising of funds is irrelevant to the project as cost inccurred in the raising of funds is a past sunk cost.
d) both After tax income & depreciation
D Answercorrect answer
a) Tax shield of depreciation and b after tax operating profits,
so answer (d) is correct
D
(d) Both (a) and (b)
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