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

Intermediate Financial Management (MindTap Course List)

13th Edition

ISBN:9781337395083

Author:Eugene F. Brigham, Phillip R. Daves

Publisher:Eugene F. Brigham, Phillip R. Daves

Chapter13: Capital Budgeting: Estimating Cash Flows And Analyzing Risk

Section: Chapter Questions

Problem 3MC

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What is the equation for estimating operating cash flows (OCF) using the top-down approach? Multiple choice question. OCF = Sales − Costs − Taxes OCF = Sales − Costs OCF = EBIT − Depreciation + Taxes OCF = EBIT + Depreciation
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In which of the approaches of calculating operating cash flows do we start with the net income and add back any non-cash deductions such as depreciation? Multiple choice question. Bottom-up approach Top-down approach Tax-shield approach Average accounting return approach
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