A Project Will Reduce Costs by $62,750 but Increase Depreciation

question 45

Multiple Choice

A project will reduce costs by $62,750 but increase depreciation by $14,812.What is the operating cash flow of this project based on the tax shield approach if the tax rate is 34 percent?

• A)$41,415.00
• B)$31,639.08
• C)$38,211.19
• D)$42,006.20
• E)$46,451.08

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Definitions:

Imports

Products or resources that are bought from foreign countries to meet domestic demand or consumption.

U.S. Exports

Goods and services produced in the United States and sold to other countries.

Deflation

A decrease in the general price level of goods and services, often indicating a contraction in the overall economy.

Real Output

The quantity of goods and services produced in an economy, adjusted for inflation, representing true productivity.