A Project Has Annual Depreciation of $16,200, Costs of $87,100

question 2

Multiple Choice

A project has annual depreciation of $16,200, costs of $87,100, and sales of $123,000. The applicable tax rate is 34 percent. What is the operating cash flow according to the tax shield approach?

• A) $23,019
• B) $27,667
• C) $27,458
• D) $29,202
• E) $29,878

---

Definitions:

Portfolio Variances

Measures the dispersion of average returns of a portfolio from its mean, indicating the level of risk involved.

Expected Return

The estimated average return on an investment, accounting for the probabilities of each possible outcome.

Undiversifiable Risk

A type of risk inherent to the entire market or market segment that cannot be mitigated through diversification.

Beta Coefficient

The beta coefficient measures the volatility of an investment in relation to the market as a whole, indicating its relative risk.