Your Company, Omega Corporation, Is Considering a New Project That

question 61

Multiple Choice

Your company, Omega Corporation, is considering a new project that you must analyze. Based on the following data, what is the project's Year 1 operating cash flow? Sales revenues$25,000
Capital cost allowance$8,000
Cash operating costs$12,000
Tax rate35.0%

• A) $10,585
• B) $10,913
• C) $11,250
• D) $11,588

---

Definitions:

Return on Equity

A measure of a corporation's profitability that reveals how much profit a company generates with the money shareholders have invested.

Return on Assets

A financial ratio that measures how efficiently a company uses its assets to generate net income, typically expressed as net income divided by total assets.

Return on Debt

An assessment of the profitability relative to the amount of debt used, often calculated as the interest rate or yield on the debt instrument.

Interest Tax Shields

The reduction in income taxes that results from taking allowable deductions for interest expenses.