When evaluating a project using discounted cash flow analysis, are cost savings (such as lower utility bills) as a result of taking on a project considered cash flows?

Also, should the increase in income taxes due to the reduced operating cost also be considered a cash flow?

  • I don't see how this is related to accounting. It's about discounted cash-flow analysis, which is relevant to investing (valuation). – D Stanley Mar 7 at 15:23
  • thanks, which stack site should this have been posted on? – user18561 Mar 11 at 20:41
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    I think this one is appropriate. That comment was for the mods - there is not a good stack site for accounting questions (but this is not an accounting question IMHO) – D Stanley Mar 11 at 20:56

Certainly. ALL cash flows related to the project should be considered, even if they represent adjustments to existing cash flows. So changes in cash expenses and taxes should be included in a DCF analysis.

Be careful, though, that you are measuring cash impacts only. Other non-cash impacts like depreciation should not be considered in a DCF analysis.

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