Which of the following is the equation for estimating operating cash flows (OCF) using the tax shield approach? Multiple choice question. OCF = (Sales − Costs) × (1 − Tax rate) + Depreciation × Tax rate OCF = (Sales − Costs) × (1 − Tax rate) OCF = (Sales − Costs) + Deprecation OCF = (Sales − Costs) × Tax rate + Depreciation × Tax rate

Which of the following is the equation for estimating operating cash flows (OCF) using the tax shield approach? Multiple choice question. OCF = (Sales − Costs) × (1 − Tax rate) + Depreciation × Tax rate OCF = (Sales − Costs) × (1 − Tax rate) OCF = (Sales − Costs) + Deprecation OCF = (Sales − Costs) × Tax rate + Depreciation × Tax rate

Principles of Accounting Volume 2

19th Edition

ISBN:9781947172609

Author:OpenStax

Publisher:OpenStax

Chapter11: Capital Budgeting Decisions

Section: Chapter Questions

Problem 15MC: The IRR method assumes that cash flows are reinvested at _________. A. the internal rate of return...

See similar textbooks

Similar questions

In the discounted cash flow (DCF) method, which of the following is the correct formula for calculating Unlevered Free Cash Flows (UFCF)? A)EBIT (1-tax rate) + Depreciation and Amortization (D&A) + Investment in Net Working Capital (\Delta NWC) + Capital Expenditure (CapEx) B)EBIT (1-tax rate) – D&A – \Delta NWC – CapEx C)EBIT (1-tax rate) + D&A – \Delta NWC + CapEx D)EBIT (1-tax rate) + D&A – \Delta NWC – CapEx E)EBIT (1-tax rate) – D&A + \Delta NWC + CapEx
How is it the operating Cash flow is positive if Earnings Before Interest and Tax is a negative figure if the formula is EBIT+Depreciation -Tax. kindly explain that calculation for operating Cash Flow
In terms of future value (FV) which of the following considerations is correct? Select one: O A. Consider only future cash flows as relevant factors O B. Consider only past cash flows as relevant factors O C. Consider past sales revenues and cost of sales as relevant factors O D. Consider future gross profit and net profits as relevant factors
b. Disregard the assumptions in Part a. What is the depreciable basis? What are the annual depreciation expenses? c. Calculate the annual sales revenues and costs (other than depreciation). Why is it important to include inflation when estimating cash flows? d. Calculate annual net operating profit after sales (NOPAT). Then calculate the operating cash flows.
After-Tax Cash Flows For each of the following independent situations, compute the net after-tax cash flow amount by subtracting cash outlays for operating expenses and income taxes from cash revenue. The cash outlay for income taxes is determined by applying the income tax rate to the cash revenue received less the cash and noncash (depreciation) expenses. Do not use negative signs with any of your answers below.
Which of the following items are included in calculating Firm Free Cash Flow? I. Cost of goods sold II. Depreciation expense III. Interest expense IV. Capital expenditures A. I and II. B. I, II and IV. C. II, III and IV. D. I and III.
Which of the following phrases best describes the term " actual cash value"? a. market value b. appraised value c. replacement cost less depreciation d. original cost less depreciation
The IRR method assumes that cash flows are reinvested at _________. A. the internal rate of return B. the companys discount rate C. the lower of the companys discount rate or Internal rate of return D. an average of the internal rate of return and the discount rate
In computing the periods net operating cash flows, why are noncash expenses added back to net income?
Which of the following should NOT be taken into account in calculating free cash flow? Select one: a. Operating income b. Interest expense c. Net working capital d. Depreciation
One method for calculating enterprise value includes the present value of which of the following cash flows? a. Terminal value of firm free cash flow from operations.b. Nonoperating income from planning period.c. Terminal value of nonoperating income.d. Firm free cash flow from planning period.e. All of the above.
While calculating Free Cash Flow (FCF), capital investment expenditure is : a Subtracted from from EBIT(1-t) +(Depreciation +Amortization) b Subtracted from EBT. c Subtracted from EBIT(1-t) d Subtracted from EBIT.