2. Which one of the following statements is true?

		Interest expense increases the amount of tax due.
		Depreciation does not affect taxes since it is a non-cash expense.
		Taxes reduce both net income and operating cash flow.
		Interest expense is included in operating cash flow.

1.Capital budgeting decisions include determining:

		which one of two long-term projects to accept.
		the amount of funds needed to finance customer purchases of a new product.
		how much debt should be assumed to fund a project.
		how much inventory will be needed to support a project.