Because CCA Is a Non-Cash Item, in Estimating the Annual

question 1

Multiple Choice

Because CCA is a non-cash item, in estimating the annual after-tax cash flows, we deal with it using one of the following two approaches:
I.Deduct CCA from operating income, then deduct the associated taxes payable, and finally add the amount of the CCA tax savings back.
II.Multiply the CCA by the company's effective tax rate and add this amount to the after-tax operating income.

• A)I and II are correct.
• B)I and II are incorrect.
• C)I is correct, II is incorrect.
• D)I is incorrect, II is correct.

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Definitions:

Hippocampus

A region of the brain involved in the formation of new memories and is also associated with learning and emotions.

Cortex

The outermost layer of the brain, involved in high-level functions such as consciousness, thought, emotion, reasoning, language, and memory.

Permanent Storage

The long-term preservation of information or data, typically in a way that it remains accessible for future reference.

Hippocampus

A critical part of the brain that plays a vital role in the creation of memories and the ability to navigate space.