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John Moffat.
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David
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Which of the following statements is correct?
A Tax allowable depreciation is a relevant cash flow when evaluating borrowing to buy compared to leasing as a
financing choice
B Asset replacement decisions require relevant cash flows to be discounted by the after-tax cost of debt
C If capital is rationed, divisible investment projects can be ranked by the profitability index when determining the
optimum investment schedule
D Government restrictions on bank lending are associated with soft capital rationingBoth A and C are correct right?
A because tax implications are relevant
and C is correct as well
:/
John Moffat
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A is not correct, because the tax allowable depreciation itself is not a cash flow. (the tax effect of it is, but not the depreciation itself).
David
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