Using the Tax Shield Approach, Calculate OCF Given the Following

question 234

Multiple Choice

Using the tax shield approach, calculate OCF given the following information: Sales $104,000; Costs $63,000; Depreciation $10,000. Tax rate is 40%.

• A) $32,200
• B) $31,300
• C) $30,400
• D) $29,500
• E) $28,600

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Definitions:

Friction Facings

Materials attached to the surface of clutch and brake components to enhance friction and improve the transfer of force.

Asbestos Facings

Materials containing asbestos used in some brake and clutch systems for their heat resistance properties, now largely replaced due to health risks associated with asbestos inhalation.

FMVSS-121 Air System

Relates to Federal Motor Vehicle Safety Standards regulations for air brake systems, ensuring performance and safety standards in commercial vehicles.

Air Reservoirs

Tanks used in pneumatic systems to store compressed air, providing a supply for various operations such as braking or air suspension.