Of the Five Expenses That Follow, Which One Is Most

question 56

Multiple Choice

Of the five expenses that follow, which one is most likely treated differently than the others when income taxes are considered in a discounted-cash-flow analysis?

• A) Salaries expense.
• B) Advertising expense.
• C) Depreciation expense.
• D) Utilities expense.
• E) Office expense.

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Definitions:

Incremental Costs

Costs that change with the decision to produce more or less product or to undertake one action over another.

Incremental Processing

A method or process that involves analyzing the additional costs or benefits that arise from producing one additional unit of a product or offering one additional unit of service.

Time Value

The concept in finance that money available now is worth more than the same amount in the future due to its potential earning capacity.

Discounted Cash Flow

Discounted cash flow is a valuation method used to estimate the attractiveness of an investment opportunity based on its expected future cash flows.