Which pair of the following statements is both false?

1. Depreciation is a non-cash expense in the year it is claimed
2. In Canada, the most common type of depreciation scheme is the UCC declining balance method for tax purposes
3. In Canada, the only acceptable type of depreciation scheme is the UCC declining balance method for tax purposes
4. Depreciation is a cash inflow in the year it is claimed
5. Linear depreciation is acceptable for book purposes only

Select one:

a. A and E

b. B and D

c. B and C

d. C and E

e. C and D

When a firm uses debt financing,

Select one:

a. it increases the required return on equity because the financial risk born by its shareholders increase

b. it increases the required return on equity because the business risk born by its shareholders increase

c. it increases the WACC because the financial risk born by its shareholders increase

d. it increases the WACC because the business risk born by its shareholders increase

e. none of the above