The Tax Shield Approach to Computing the Operating Cash Flow,given

question 63

Multiple Choice

The tax shield approach to computing the operating cash flow,given a tax-paying firm:

• A)ignores both interest expense and taxes.
• B)separates cash inflows from cash outflows.
• C)considers the changes in net working capital resulting from a new project.
• D)is based on the fact that depreciation does not affect the operating cash flows.
• E)recognizes that depreciation creates a cash inflow.

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Definitions:

Lies

False statements made with the deliberate intention to deceive; an intentional untruth.

Prima Facie Duty

An obligation that appears to be binding upon first view, but may be overridden by stronger moral considerations.

Keep Promises

The act of fulfilling a commitment or assurance one has made.

Absolute Moral Rules

Ethical principles that are considered universally applicable and unwavering under all circumstances.