Assuming that a business has a project with anticipated positive net annual operating cash flows, assuming all other factors remain the same, the inclusion of income taxes in the capital budgeting analysis will:

A) increase the net present value.
B) decrease the net present value.
C) have no impact on the net present value.
D) not be determinable.

Incremental Cost Approach

A decision-making process that focuses on the changes in total cost that would result from a decision to pursue one alternative over another.

Income Taxes

Taxes charged by the government on earnings generated by businesses and individuals within its jurisdiction.

Net Present Value

A calculation used to estimate the value of an investment, adjusting for its cash inflows and outflows over time and discounting them to the present day.