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

question 42

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)recognises that depreciation creates a cash inflow

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