If There Are No Taxes, Would Depreciation and Opportunity Costs

question 45

Multiple Choice

If there are no taxes, would depreciation and opportunity costs be relevant in assessing a project's cash flows?

• A)Both would not be relevant.
• B)Only depreciation would not be relevant.
• C)Only opportunity costs would not be relevant.
• D)Both would still be relevant.

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Definitions:

Short Run

A period of time during which at least one factor of production is fixed, usually considered in economic models and analyses.

Long Run

A period of time in economics sufficiently long to allow for all inputs to production, such as plant and equipment, to be varied (as opposed to just the amount of labor or raw materials).

Total Loss

A situation in insurance where the cost of repairing a damaged property exceeds the property's value, making it economically unfeasible to repair.

Total Loss

The complete financial loss of an asset's value, often in the context of insurance or investments.