Which of the Following Are Correct Methods for Computing the Operating

question 24

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) × (Taxes + Depreciation) × (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:

Programmed Decisions

Decisions that are routine and repetitive, which can be handled by established business rules and procedures.

Imagery

The use of visually descriptive or figurative language in writing to create vivid pictures in the reader's mind or the use of visual representations in the mind through imagination.

Logical Sequence

The orderly and coherent structure and progression of ideas, events, or steps.

Management Decisions

Decisions made by individuals in managerial positions that affect the direction, operation, and success of an organization.