When Income Taxes Are Considered in Capital Budgeting, the Cash

question 82

Multiple Choice

When income taxes are considered in capital budgeting, the cash flows related to a company's advertising expense would be correctly figured by taking the cash paid for advertising and:

• A) adding the result of multiplying (advertising expense × tax rate).
• B) adding the tax rate.
• C) adding the result of multiplying [advertising expense × (1 - tax rate)].
• D) subtracting the result of multiplying (advertising expense × tax rate).
• E) subtracting the result of multiplying [advertising expense × (1 - tax rate)].

---

Definitions:

Recency Effect

The tendency to remember the latest information encountered when recalling a list or series of items.

Fundamental Attribution

The tendency to overemphasize personality traits and underestimate situational factors when explaining others' behavior.

Reciprocity

A mutual exchange of privileges, benefits, or actions between people, where one's action leads to a response of a similar kind.

Social Loafing

The occurrence in which people put in less effort to reach an objective while working as part of a team compared to when they are working individually.