Quiz Ch 09 – Characteristics of the Depreciation Tax Shield
Fundamentals of Corporate Finance
Brealey, Myers, and Marcus
10th Edition
What is accurate regarding the depreciation tax shield?
What is accurate regarding the depreciation tax shield?
What factors should be taken into account when evaluating a proposed project?
What is the appropriate approach for calculating cash flow from operations?
What method is more likely to improve the perception of an unacceptable project to make it appear acceptable?
What is the usual consequence of opting for straight-line depreciation rather than bonus depreciation in a company’s financial records?
What happens when a project that involves a $20,000 investment in net working capital ends?
What modification would raise the NPV of a project when a positive discount rate is applied?
Which is least likely to influence the decision to pursue an investment?
What factor would cause a reduction in the net present value of a project involving the introduction of a new product that necessitates an investment in new machinery?
When calculating cash flow, what should the company do with the depreciation tax shield for an investment of $120,000 that can be depreciated for tax purposes straight-line over 6 years at a corporate tax rate of 21%?