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:

Outside Basis

It refers to the tax basis, or the value of an individual's investment in an entity like a partnership or S corporation, outside of the company's own assets.

Contributed Property

Assets or property given to a charitable organization, potentially eligible for a tax deduction based on the property's fair market value.

Partnership Formation

The process of creating a partnership, which involves two or more parties joining together to carry on a trade or business, with each contributing money, property, labor, or skill.

Guaranteed Payments

Payments made by a partnership to a partner for services or the use of capital without regard to the partnership's income.