Which of the following statements is FALSE? A)The terminal or continuation value of the project represents the market value (as of the last forecast period)of the free cash flow from the project at all future dates. B)The incremental effect of a project on the firm's available cash is the project's free cash flow. C)(1 - τ_c)× Depreciation is called the depreciation tax shield. D)To evaluate a capital budgeting decision,we must determine its consequences for the firm's available cash.

Question

Quizplus · Accepted Answer

The statement in C is false because the depreciation tax shield is calculated as the depreciation expense multiplied by the tax rate, not by the complex formula given.

Which of the Following Statements Is FALSE