If Depreciation Expense in Year One of a Project Increases

question 152

Multiple Choice

If depreciation expense in year one of a project increases for a highly profitable company,

• A) net income decreases and incremental free cash flow decreases.
• B) net income increases and incremental free cash flow increases.
• C) the book value of the depreciating asset increases at the end of year one.
• D) net income decreases and incremental free cash flow increases.

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Definitions:

Transportation Companies

Businesses that provide services to move goods or individuals from one location to another, using various modes of transport.

Customer Value

The perceived worth of a product or service to the customer, relative to the cost and alternatives.

Nonmonetary Benefits

Advantages or perks received from a job or purchase that don't involve direct financial compensation.

Monetary Benefits

Financial gains obtained from actions such as investments, employment, or business operations.