Which of the Following Statements Is FALSE

question 83

Multiple Choice

Which of the following statements is FALSE?

• A)Depreciation is a method used for accounting and tax purposes to allocate the original purchase cost of the asset over its life.
• B)Sometimes the firm explicitly forecasts free cash flow over a shorter horizon than the full horizon of the project or investment.
• C)Earnings include the cost of capital investments,but do not include non-cash charges,such as depreciation.
• D)Firms often report different depreciation expenses for accounting and for tax purposes.

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Definitions:

Financial Contracts

Agreements between parties to conduct a financial transaction according to specified terms.

Synthetic Stock Positions

Financial derivative strategies that mimic the outcomes of holding an actual stock, using instruments such as options.

Market Timers

Individuals or entities that attempt to predict market movements and make buying or selling decisions based on those predictions.

Transaction Cost

Expenses incurred when buying or selling securities, including commissions, taxes, and other fees.