Which of the Following Statements Is FALSE

question 44

Multiple Choice

Which of the following statements is FALSE?

• A)Because only the tax consequences of depreciation are relevant for free cash flow,we should use the depreciation expense that the firm will use for tax purposes in our free cash flow forecasts.
• B)A firm generally identifies its marginal tax rate by determining the tax bracket that it falls into based on its overall level of pre-tax income.
• C)Free Cash Flow = (Revenues - Costs)× (1 - τ_c)- Capital Expenditures - ΔNWC + τ_c × Depreciation.
• D)Net working capital is the difference between current liabilities and current assets.

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Definitions:

Tariffs

Taxes imposed on imported goods aimed at making them more expensive than similar locally-produced goods to protect domestic industries from foreign competition.

Consumers

People or collectives who buy products and services for their own consumption.

Producers

Individuals or organizations that create goods or services to satisfy market needs.

Embargo

A government order restricting or prohibiting trade and commerce with a specific country or the exchange of specific goods.