Which of the Following Statements Is CORRECT

question 57

Multiple Choice

Which of the following statements is CORRECT?

• A) Using accelerated depreciation rather than straight line would normally have no effect on a project's total projected cash flows but it would affect the timing of the cash flows and thus the NPV.
• B) Under current laws and regulations,corporations must use straight-line depreciation for all assets whose lives are 5 years or longer.
• C) Corporations must use the same depreciation method (e.g. ,straight line or accelerated)for stockholder reporting and tax purposes.
• D) Since depreciation is not a cash expense,it has no effect on cash flows and thus no effect on capital budgeting decisions.
• E) Under accelerated depreciation,higher depreciation charges occur in the early years,and this reduces the early cash flows and thus lowers a project's projected NPV.

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Definitions:

Correlation Coefficient

A statistical measure that indicates the extent to which two or more variables fluctuate together, signifying the strength and direction of their relationship.

The Mean

A statistical measure representing the average value in a set of numbers, calculated by dividing the sum of all values by the number of values.

The Median

A statistical measure representing the middle value in a given set of numbers, where half the numbers are above and half are below this value.

Control Variable

A control variable is a factor that is kept constant to accurately assess the relationship between other variables in a research study.