Zazu Company Is Considering Modifying a Transaction to Reduce the Current

question 70

Multiple Choice

Zazu Company is considering modifying a transaction to reduce the current year tax cost by $50,000. Which of the following statements is false?

• A) The modification will increase the NPV of the transaction by $50,000.
• B) The modification may affect the transaction's before-tax cash flows.
• C) The modification may reduce the tax cost but increase one or more nontax costs.
• D) The modification may not be desirable even though it reduces the tax cost.

---

Definitions:

Right to Redeem

The legal right to reclaim property or an asset that has been sold, under certain conditions, within a specified period.

Security Agreement

A contract that grants a lender a security interest in a specified asset or property, serving as collateral for a loan.

Personal Property Registry

The Personal Property Registry is a legal database where security interests in personal property (items other than real estate) are registered, facilitating the public notice of claims.

Personal Property Registry

A legal registry for the public recording of interests in personal property (excluding real estate) to establish priorities and rights in that property.