Which of the Following Statements Is False

question 53

Multiple Choice

Which of the following statements is false?

• A) Sales will ultimately decline as the product nears obsolescence or faces increased competition.
• B) Managers sometimes continue to invest in a project that has a negative NPV because they have already invested a large amount in the project and feel that by not continuing it, the prior investment will be wasted.
• C) With straight-line depreciation the asset's cost is divided equally over its life.
• D) A project's unlevered net income is equal to its incremental revenues less costs and depreciation, evaluated on an pre-tax basis.

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Definitions:

Plant Asset's

Tangible assets that are used in the operation of a business and are not intended for resale, such as machinery, buildings, and equipment.

Useful Life

The estimated duration of time that an asset is expected to be functional and economically viable for its intended purpose.

Total Asset Turnover

A financial metric that measures the efficiency of a company's use of its assets in generating sales revenue, calculated by dividing sales revenue by total assets.

Financial Condition

The status of a company's assets, liabilities, and equity positions at a specific point in time, as depicted in its financial statements.