Which One of the Following Is a Correct Method for Computing

question 3

Multiple Choice

Which one of the following is a correct method for computing the operating cash flow of a project assuming that the interest expense is equal to zero?

• A) EBIT + Depreciation
• B) EBIT(1 + Taxes)
• C) Net income + Depreciation
• D) (Sales − Costs)(1 − Depreciation)(1 − Taxes)
• E) (Sales − Costs)(1 − Taxes)

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Definitions:

Production Capacity

The maximum amount of goods or services that can be produced in a given period under normal working conditions.

Lost Contribution Margin

The amount of contribution margin that is not realized due to not selling a product or service, often calculated as the sales price minus variable costs for the unsold units.

Commercial Security Division

A branch within a corporation focused on providing security services and solutions to businesses and commercial properties.

Valve Division

A specific segment or department within a company that focuses on the manufacturing and sale of valves; this term could also relate to an organizational unit in a business.