3. Which of the following statements is FALSE (5 points)? A) The firm deducts a fraction of the investments in plant, property, and equipment each year as depreciation. B) If securities are fairly priced, the net present value of a fixed set of cash flows is independent of how those cash flows are financed. C) Sunk cost fallacy is a term used to describe the tendency of people to ignore sunk costs in capital budgeting analysis. D) A good rule to remember is that if our decision does not affect a cash flow then the cash flow should not affect our decision. 4. Which of the following statements is FALSE (5 points)? A) Depreciation is a method used for accounting and tax purposes to allocate the original purchase cost of the asset over its life. B) Sometimes the firm explicitly forecast free cash flow over a shorter horizon than the full horizon of the project or investment. C) Earnings include the cost of capital investments, but do not include non-cash charges, such as depreciation. D) Firms often report a different depreciation expense for accounting and for tax purposes. 5. Which of the following statements is FALSE (5 points)? A) We should use the general dividend discount model to value the stock of a firm with rapid or changing growth. B) As firms mature, their growth slows to rates more typical of established companies. C) The dividend discount model values the stock based on a forecast of the future dividends paid to shareholders. D) The simplest forecast for the firm's future dividends states that they will grow at a constant rate, g, forever