Q. Which of the following statements is correct?

  • (A) over a project’s life, a typical business will generate a greater amount of total project cash flows (undiscounted) if a faster depreciation method is adopted.
  • (B) no matter which depreciation method you adopt, total tax obligations over a project’s life remain unchanged.
  • (C) depreciation recapture equals cost basis minus an asset’s book value at the time of disposal, that is, if the salvage value is less than the asset’s cost basis.
  • (D) cash flows normally include depreciation expenses since they represent a cost of doing business.
πŸ’¬ Discuss
βœ… Correct Answer: (B) no matter which depreciation method you adopt, total tax obligations over a project’s life remain unchanged.

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