Working capital will affect incremental cash flows if: A. current liabilities change more than current assets. B. current assets change more than current liabilities. C. inventory changes from previous levels. D. net working capital changes from previous levels. 7. Which of the following statements is most likely to be correct for a project in which the NPV is negative when based on the inflows from net income? A. NPV may turn positive after adjusting for depreciation expense. B. NPV should be calculated with pretax cash flows. C. NPV has probably been overestimated. D. The project should be rejected or abandoned 8. A tax shield loss is created upon the sale of an asset from a pool will occur whenever: A. salvage is greater than zero. B. the asset has been partially depreciated. C. the corporation keeps two sets of books. D. the asset's market value exceeds its book value. 9. Firms favour assets with high CCA rates because: A. they have longer economic lives. B. it reduces the total amount of taxes paid over the project's life. C. they increase net accounting profits over the project's life. D. their choice impacts project net present value favourably. 10. Canada Revenue Agency required that Capital Cost Allowance (CCA) replace depreciation in the determination of what a firm pays in taxes in a given fiscal year because: A. Allowing the use of depreciation could result in the firm paying less taxes than it should the fiscal year B. Using CCA will always provide a tax benefit to small businesses C. Using CCA makes the preparation of the firm's financial statements more accur