By Using the Tax Shield Approach for Calculating Operating Cash

question 249

Multiple Choice

By using the tax shield approach for calculating operating cash flows we can:

• A) Obtain more accurate results than with the customary methods.
• B) More readily verify what cash flows would be without interest expenses.
• C) More readily identify the tax benefits of debt financing.
• D) More readily identify the tax benefits of depreciation.
• E) Start with the bottom line, net income, and work backwards.

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Definitions:

Systematic Desensitization

A therapy technique used to treat phobias and anxiety disorders by gradually exposing the patient to the anxious stimuli.

Fear-Producing Stimuli

External cues or situations that elicit a fear response, which can be innate or learned through experience.

Muscular Relaxation

A technique used to reduce stress and anxiety by tensing and then slowly relaxing each muscle group in the body.

Learned Helplessness

A condition of passivity apparently created by exposure to inescapable aversive events. This condition inhibits or prevents learning in later situations in which escape or avoidance is possible.