Why, when computing cash flow, is depreciation ignored (in the tax shield approach) or even subtracted out (in the bottom up approach) but then added back at the end? Because depreciation is important only at the very end of a project Because depreciation is positive in the beginning but negative at the end Because depreciation is a non-cash expense that reduces taxes owed Because depreciation is classified as net working capital Because depreciation is an annuity that is computed through the annuity formula QUESTION 2 What will happen to the per share stock price of most dividend paying stocks on the ex-dividend date, and why? Fall by more than the amount of the dividend, because dividends are not valuable Rise by more than the dividend because of the bird-in-hand explanation Rise but by less than the amount of the dividend because of tax rate differentials Fall by (approximately) the amount of the dividend because the stock price no longer includes a dividend payment Not change because dividends have no real value, meaning that they are not real cash flows QUESTION 3 The Net Present Value (NPV) of a project represents How much the net income of the firm will increase (or decrease) if the project is accepted. How much the value of the firm's debt will increase (or decrease) if the project is accepted. How much the value of the firm will increase (or decrease) if the project is accepted. How much the revenue of the firm will increase (or decrease) if the project is accepted