Which of the Following Statements Is FALSE

question 24

Multiple Choice

Which of the following statements is FALSE?

• A)Because only the tax consequences of depreciation are relevant for free cash flow,we should use the depreciation expense that the firm will use for tax purposes in our free cash flow forecasts.
• B)A firm generally identifies its marginal tax rate by determining the tax bracket that it falls into based on its overall level of pre-tax income,though C-corporations only have a single tax rate as a result of the Tax Cuts and Jobs Act of 2017.
• C)Free Cash Flow = (Revenues - Costs)× (1 - τc)- Capital Expenditures - ΔNWC + τc × Depreciation.
• D)Net working capital is found by subtracting current assets from current liabilities.

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Definitions:

Oligopoly

A market structure characterized by a small number of firms that control a large majority of the market share, often leading to limited competition.

Pure Monopoly

A pure monopoly is a market structure where a single seller controls the entire supply of a product or service, and where the entry of new competitors is completely blocked.

Purely Competitive Industry

An economic setup where numerous purchasers and vendors exist, entry and exit are unrestricted, and the product offered is identical across sellers.

Oligopoly

Oligopoly is a market structure characterized by a small number of firms whose decisions about production and pricing significantly affect the market.