The capital budgeting manager for XYZ Corporation, a very profitable high technology company,
completed her analysis of Project A assuming 5-year depreciation.
Her accountant reviews the
analysis and changes the depreciation method to 3-year depreciation. This change will
A) only change the NCFs if the useful life of the depreciable asset is greater than 5 years.
B) increase the present value of the NCFs.
C) decrease the present value of the NCFs.
D) have no effect on the NCFs because depreciation is a non-cash expense.
B
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Indicate whether the statement is true or false