Which of the Following Statements Is False

question 15

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 purposed 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:

Risk Barrier

A hurdle or challenge that must be overcome to achieve a goal, often related to uncertainty or potential losses in business or investment.

Diffusion of Innovation

The process by which a new idea, product, or behavior spreads through a population or society.

Information Sources

Various origins from which data or knowledge can be obtained, including books, internet, experts, or empirical observation.

Psychological Barrier

Mental or emotional resistance that inhibits a person from accepting, understanding, or acting upon a new idea or behavior.