Answer (C) is correct . Discounted cash flow analysis, using either the internal rate of return (IRR) or the net present value (NPV) method, is based on the time value of cash inflows and outflows. All future operating cash savings are considered, as well as the tax effects on cash flows of future depreciation charges. The cash proceeds of future asset disposals are likewise a necessary consideration. Depreciation expense is a consideration only to the extent that it affects the cash flows for taxes. Otherwise, depreciation is excluded from the analysis because it is a noncash expense.
Answer (A) is incorrect because Future operating cash savings is a consideration in discounted cash flow analysis.
Answer (B) is incorrect because The current asset disposal price is a consideration in discounted cash flow analysis.
Answer (D) is incorrect because The tax effects of future asset depreciation is a consideration in discounted cash flow analysis.
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