Question

Which one of the following statements is False? a. The depreciation tax shield is the cash tax savings the firm receives from its (non-cash) depreciation expense b. To maximize shareholder wealth, a financial manager needs to find capital budgeting projects that have positive net present values c. A capital budgeting project’s cash flows, including the total up-front cost of the project, are typically known with certainty before the project starts d. The choice between MACRS and straight-line depreciation is purely a time value issue; the total depreciation is the same, only the timing differs

Answer 1

Answer:

c. A capital budgeting project’s cash flows, including the total up-front cost of the project, are typically known with certainty before the project starts

Explanation:

It is false to say that a capital budgeting project’s cash flows, including the total up-front cost of the project, are typically known with certainty before the project starts.

Capital budgeting can be defined as the process of identifying, evaluating, and implementing a company's investment opportunities.