Which of the Following Are Correct Methods for Computing the Operating

question 31

Multiple Choice

Which of the following are correct methods for computing the operating cash flow of a project assuming that the interest expense is equal to zero?
I.EBIT + Depreciation - Taxes
II.EBIT + Depreciation + Taxes
III.Net Income + Depreciation
IV.(Sales - Costs) x (Taxes + Depreciation) x (1 - Taxes)

• A)I and III only.
• B)II and IV only.
• C)II and III only.
• D)I, III, and IV only.
• E)II, III, and IV only.

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Definitions:

Stated Rate

The interest rate declared on a financial instrument, such as a bond or loan, not taking into account compounding or fees.

Par

The face value of a bond or security, often used in the context of bonds trading at, above, or below their issued price.

Market Rate

The prevailing interest rate available in the marketplace for similar financial instruments or loans.

Financial Instrument

A contract that gives rise to a financial asset of one entity and a financial liability or equity instrument of another entity.