Question

Which of the following statements is? FALSE?

1. With straight?linedepreciation the? asset's cost is divided equally over its life.

2. Managers sometimes continue to invest in a project that has a negative NPV because they have already invested a large amount in the project and feel that by not continuing? it, the prior investment will wasted.

3. A projects unlevered net income is equal to its incremental revenues less costs and? depreciation, evaluated on an pre?tax basis.

4. Sales will ultimately decline as the product nears obsolescence or faces increased competition.

Answer 1

The False Statement is " 3. A projects unlevered net income is equal to its incremental revenues less costs and? depreciation, evaluated on an pre?tax basis "

The All other remaining statements are TRUE,

- Straight Line Method of Depreciation allocated the cost of the assets over it's useful Life,

- Sometimes the Managers continue to invest in a project which has a negative net present value, Since they have invested a huge amount of Investment in the project and feel that by not continuing? it, the prior investment will wasted.

- Sales will ultimately decline as the product nears obsolescence or faces increased competition.