Which of the Following Statements Is CORRECT

question 12

Multiple Choice

Which of the following statements is CORRECT?

• A) Since depreciation is a cash expense,the faster an asset is depreciated,the lower the projected NPV from investing in the asset.
• B) Under current laws and regulations,corporations must use straight-line depreciation for all assets whose lives are 5 years or longer.
• C) Corporations must use the same depreciation method for both stockholder reporting and tax purposes.
• D) Using bonus depreciation rather than straight line normally has the effect of receiving depreciation cash flows immediately and thus increasing a project's forecasted NPV.
• E) Using bonus depreciation rather than straight line normally has the effect of delaying the receipt of depreciation cash flows and thus reducing a project's forecasted NPV.

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Definitions:

Savings

The portion of disposable income not spent on consumption of consumer goods but accumulated or invested.

Disposable Income

The financial surplus households hold for spending and saving after income taxes have been applied.

Savings

Money that is put aside for future use rather than spent immediately.

Suburban Lifestyle

A way of living that typically involves residing in outlying residential areas of cities, often characterized by single-family homes and emphasis on community and family life.