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Midterm

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Department
Economics
Course
ECO1192
Professor
All Professors
Semester
Fall

Description
Engineering EconomicsECO 1192nd2 MidTerm Practice ExaminationCThoret1A business should maintain accurate depreciation records of capital assets toa track the value of its fixed physical assetsb reflect all production costsc accurately determine its income tax credits or liabilitiesd All of the above answers 2A capital physical assets annual accounting depreciation is defined as its a purchase price less its total depreciationb current market value less its total depreciation cmarket value at the end of the year plus its market value at the beginning of the year d None of the above answers3The Declining Balance DB depreciation method is always preferred to the Straight Line SL depreciation method because the DB method fully and more rapidly depreciates a fixed asset than the SL method a Trueb False4Which of the following statements is truea Smaller depreciation charges lead to more taxable income smaller tax liabilities and smaller aftertax cash flowsb Smaller depreciation charges lead to less taxable income smaller tax liabilities and smaller aftertax cash flowsc Higher depreciation charges lead to less taxable income larger tax liabilities and larger aftertax cash flowsd Higher depreciation charges lead to less taxable income smaller tax liabilities and larger aftertax cash flowseNone of the above answers5A major difference between the analysis of private sector projects and the analysis of public sector projects is that the analysis ofaprivate sector projects includes all tangible and intangible impacts while the analysis of public sector projects is limited to tangible impactsbprivate sector projects includes only tangible impacts as does the analysis of public sector projectscprivate sector projects include only tangible impacts while the analysis of public sector projects includes both tangible and intangible impactsdNone of the above answers6The net income ie income after tax of a business is equal to itsa beforetax cash flowincome taxes paidannual depreciation b aftertax cash flowincome taxes paidc beforetax cash flowincome taxes paidannual depreciationd aftertax cash flowannual depreciatione None of the above answers7A companys annual income taxes are considered explicit cash flows while its annual depreciation charges are implicit cash flows a Trueb False8At the end of the economic life of a physical asset its book and salvage values will always be equal with the straight line depreciation method but will most likely differ with the Declining Balance depreciation methoda Trueb False9When the service requirements for a capital asset extend beyond the defenders remaining service life it is usually assumed that the defender will be replaced by
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