Pro Forma Free Cash Flows for a Proposed Project Should

question 16

Multiple Choice

Pro forma free cash flows for a proposed project should:
i.exclude the cost of employing existing assets that could be sold anyway.II.exclude interest expense.III.include the depreciation tax shield related to the project.IV.exclude any required increase in operating current assets.

• A) I and II only
• B) II and III only
• C) II and IV only
• D) I,III,and IV only
• E) I,II,III,and IV

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Definitions:

Interest Rate

The amount of a loan that is subject to interest charges for the borrower, typically expressed as an annual percentage of the current loan balance.

Consumption

Households' practice of using goods and services.

Interest Rate

The interest rate is the percentage of a sum of money charged for its use, determining the cost of borrowing or the reward for saving.

Income

Money received on a regular basis from work, investments, business, or other sources.