The Incremental Cash Tax Flow for a Capital Budgeting Project

question 50

Multiple Choice

The incremental cash tax flow for a capital budgeting project is calculated using which of the following formulas?

• A) Annual depreciation × marginal income tax rate
• B) Annual depreciation × (1 - marginal income tax rate)
• C) (Operating cash flow + annual depreciation) × marginal income tax rate
• D) Operating cash flow × marginal income tax rate

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