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Question 4 Which statement is most true? Given the same sales, operating costs, interest rates, and...

Question 4

Which statement is most true?

Given the same sales, operating costs, interest rates, and tax rates, greater depreciation will lead to a greater tax bill.

Operating income is not affected by interest paid or taxes paid.

The bottom line of an income statement is the firm’s cash flow.

Depreciation reduces EBIT, therefore it will reduce the firm’s cash flow.

Depreciation is not a cash expense, so it does not have any effect on net income.
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