Which of the Following Is a Cash Flow That Might

question 15

Multiple Choice

Which of the following is a cash flow that might occur when new equipment is purchased?

• A)Cash outflow for depreciation
• B)Cash inflow in the form of cost savings
• C)Cash outflow to pay the salvage value of the old equipment
• D)Cash inflow for interest paid

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Definitions:

Tax Rate

The percentage at which an individual or corporation is taxed by the government on its income.

Depreciation

The process of allocating the cost of a tangible asset over its useful life, reflecting its consumption, wear and tear, or obsolescence.

Pro Forma Statement

A financial document that forecasts the future income, expenses, or financial position of a company under hypothetical conditions.

Variable Costs

Expenditures that vary in a direct manner with the volume of output or sales.