What Is the Undiscounted Cash Flow in the Final Year

question 14

Multiple Choice

What is the undiscounted cash flow in the final year of an investment,assuming $10,000 after-tax cash flows from operations,$1,000 from the sale of a fully depreciated machine,$2,000 required in additional working capital,and a 35% tax rate?

• A) $8,450
• B) $12,600
• C) $12,650
• D) $14,000

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Definitions:

Spot Rate

The current market price for immediate settlement of a currency exchange, commodity, or security.

Singapore Dollars (SGD)

The official currency of Singapore, represented by the symbol S$.

Cash-flow Hedge

A hedge of the exposure to variability in cash flows that is attributable to a particular risk associated with a recognized asset or liability, or a forecasted transaction.

Financial Statements

Financial statements are written records that convey the business activities and the financial performance of a company, including balance sheet, income statement, and cash flow statement.