Since each project is unique and uniquely interacts with other aspects of the manufacturing operation, it is difficult to accurately estimate average total benefits that result from energy efficiency projects. Enhanced corporate image is one benefit that a company will probably not attempt to quantify, but it will still be taken into account qualitatively when making decisions with environmental benefits. Many financial analyses of efficiency projects erroneously neglect tax implications. Both costs and benefits need to reflect tax implications when making an investment decision. The result is that it pays more taxes and the cashflow benefit is reduced accordingly.
Taxes also affect costs by way of depreciation.
Although depreciation is a noncash charge, it is treated as an expense, which lowers taxable income. Because each company's tax rate differs and depreciation calculations can be complex, involving issues such as early write-offs of old equipment, it is best to leave this portion of a financial analysis to a financial analyst. After-tax cashflows, which reflect the depreciation tax shield, are used to calculate a Net Present Value or Internal Rate of Return. The complexity of these calculations merit the attention of a financial analyst. However, the most important component of a cashflow analysis is the calculation of costs and benefits, which are best estimated by technical and engineering staff.