Which of the Following Statements Is CORRECT

question 11

Multiple Choice

Which of the following statements is CORRECT?

• A) Since depreciation is not a cash expense, and since cash flows and not accounting income are the relevant input, depreciation plays no role in capital budgeting.
• B) Under current laws and regulations, corporations must use straight- line depreciation for all assets whose lives are 3 years or longer.
• C) If firms use accelerated depreciation, they will write off assets slower than they would under straight-line depreciation, and as a result projects' forecasted NPVs are normally lower than they would be if straight-line depreciation were required for tax purposes.
• D) If they use accelerated depreciation, firms can write off assets faster than they could under straight-line depreciation, and as a result projects' forecasted NPVs are normally lower than they would be if straight-line depreciation were required for tax purposes.
• E) If they use accelerated depreciation, firms can write off assets faster than they could under straight-line depreciation, and as a result projects' forecasted NPVs are normally higher than they would be if straight-line depreciation were required for tax purposes.

---

Definitions:

Encoded

The process of converting information into a particular form, often for storage, transmission, or processing in communications and information technology.

Tournament Game

A competition involving a series of games or rounds, where the outcome determines the advancement to subsequent rounds.

Effortful Processing

A type of information processing that requires attention and conscious effort in order to encode or remember information.

Mental Image

A representation of sensory information in the mind, which is not currently being perceived, such as visualizing an object, sound, or situation.