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.

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Definitions:

Board Members

Individuals elected or appointed to serve on the governing body of an organization, responsible for overseeing its management and operations.

Performance Accountability

Holding individuals or teams responsible for achieving specific outcomes or objectives, often measured through performance metrics.

Strategic Management

The process of planning, monitoring, analyzing, and assessing an organization's resources and environment to achieve its goals and objectives.

Cost Leadership Strategy

A strategy that seeks to operate with low cost so that products can be sold at low prices.