The Tax Shield Approach to Computing the Operating Cash Flow

question 46

Multiple Choice

The tax shield approach to computing the operating cash flow, given a tax-paying firm:

• A)ignores both interest expense and taxes.
• B)separates cash inflows from cash outflows.
• C)considers the changes in net working capital resulting from a new project.
• D)ignores all noncash expenses and their effects.
• E)recognizes that depreciation creates a cash inflow.

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Definitions:

Diastereomer

Isomers in stereochemistry that don't act as mirror counterparts and exhibit unique physical and chemical traits.

Specific Rotation

A property of chiral substances that measures the direction and degree to which they rotate plane-polarized light.

Enantiomeric Excess

A measurement of the purity of an enantiomer in a mixture, defined as the difference in percentage between the two enantiomers.

Diastereomers

Stereoisomers which aren't each other's mirror reflections and possess distinct physical characteristics.