Which of the Following Statements Best Describes CCA

question 64

Multiple Choice

Which of the following statements best describes CCA?

• A) Using CCA method rather than straight-line depreciation would normally have no effect on a project's total projected cash flows but it would affect the timing of the cash flows and thus the NPV.
• B) Corporations must use the same depreciation method (e.g., straight-line or CCA) for stockholder reporting and tax purposes.
• C) Since CCA deduction is not a cash expense, it has no affect on cash flows and thus no affect on capital budgeting decisions.
• D) Under CCA rules, higher CCA deductions occur in the early years, and this reduces the early cash flows and thus lowers a project's projected NPV.

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Definitions:

Flextime

A program that allows employees to choose their starting and ending times, provided that they are at work during a specified core period.

Preferred Time

A designated or chosen period that is seen as most suitable or desirable for a specific purpose or activity.