Question

1) Depreciation expense shields income from taxes and reduces cash outflows of tax paying investors. True...

1) Depreciation expense shields income from taxes and reduces cash outflows of tax paying investors.

True or false

2) After Tax benefits and costs of investment can be calculated if a business' tax rate is known

True or False
Business   Finance   
0 0
Add a commentTranscribed image text
Next >

Homework Answers

Answer #1

Answer:- True

Explanation:- It is true that depreciation expense shields income from taxes and reduces cash outflows of tax paying investors. A depreciation tax shield is actually a tax reduction technique in which depreciation expenses are subtracted from taxable income.

Answer:- False

Explanation:- Costs of investment can not be calculated if a business' tax rate is known. If only business' tax rate is known then the cost of investment can't be known as it requires additional income.

0 0
Know the answer?
Your Answer:

Post as a guest

Your Name:

What's your source?

Earn Coins

Coins can be redeemed for fabulous gifts.

Log In

Sign Up

Not the answer you're looking for?
Ask your own homework help question
Similar Questions
a. The portion of income taxes expense that is deferred to future tax returns is credited...
a. The portion of income taxes expense that is deferred to future tax returns is credited to a noncurrent asset account entitled Deferred Income Taxes TRUE OR FALSE b. A corporation, like a partnership, must file a corporate income tax return and pay tax on its earnings TRUE OR FALSE c. For an individual taxpayer, the federal income tax rate on ordinary income is at least as high as the rate on capital gains TRUE OR FALSE D. Deferred tax...
Which of the following statements is CORRECT? a. Operating income is derived from the firm's regular...
Which of the following statements is CORRECT? a. Operating income is derived from the firm's regular core business. Operating income is calculated as Revenues less Operating costs. Operating costs do not include interest or taxes. b. Depreciation reduces a firm's cash balance, so an increase in depreciation would normally lead to a reduction in the firm's cash flow. c. Depreciation is not a cash charge, so it does not have an effect on a firm's reported profits. d. The more...
1. Operating Income and Earnings Before Income and Taxes (EBIT) is the same item on an...
1. Operating Income and Earnings Before Income and Taxes (EBIT) is the same item on an income statement. True or false? 2. When comparing two projects, the project with the higher Net Present value (NPV), will also have the higher Internal Rate of Return. True or false? 3. If a company would like to increase the risk of a project, they would lower the interest rate (discount rate) they use in their Net Present Value calculations. True or false? 4....
Tyson Company has a pre-tax net cash inflow of $1,200,000. The company can claim depreciation expense...
Tyson Company has a pre-tax net cash inflow of $1,200,000. The company can claim depreciation expense of $800,000 this year, and is subject to a combined income tax rate of 24%. What is the after-tax cash inflow for the year? $1,104,000. $456,000. $1,200,000. $400,000. $96,000.
Tyson Company has a pre-tax net cash inflow of $1,100,000. The company can claim depreciation expense...
Tyson Company has a pre-tax net cash inflow of $1,100,000. The company can claim depreciation expense of $400,000 this year. The company is subject to a combined income tax rate of 21%. What is the after-tax cash flow for the year? $700,000. $869,000. $1,018,000. $953,000. $1,100,000.
For the current year, Eastern Atlantic Company reported income tax expense of $21,000. Income taxes payable...
For the current year, Eastern Atlantic Company reported income tax expense of $21,000. Income taxes payable at the end of the prior year were $19,000 and at the end of the current year were $20,000. The deferred tax liability classified as noncurrent that resulted from the use of MACRS for tax purposes and straight-line depreciation for financial reporting purposes increased from $21,000 at the beginning of the current year to $23,000 at the end of the current year. How much...
1. True/ False ? a) Diversification reduces the market risk of a portfolio. b) For a...
1. True/ False ? a) Diversification reduces the market risk of a portfolio. b) For a given level of expected returns, the primary goal of investors is to minimize the beta of their portfolio. c) In an MM world, WACC equals the return on assets. d) After-tax WACC should be used as a discount rate for a firm’s average project.
1) Future taxable amounts is calculated using the future enacted tax rate. (answer True or False)...
1) Future taxable amounts is calculated using the future enacted tax rate. (answer True or False) 2) Pretax income and income before taxes would typically be different due to permanent differences. (answer True or False)
. Suppose the corporate tax rate is 35% and investors pay a tax rate of 15%...
. Suppose the corporate tax rate is 35% and investors pay a tax rate of 15% on income from dividends or capital gains and a tax rate of 29% on interest income. Your firm adds debt so it pays an additional $15 million in interest each year. It pays this interest expense by cutting its dividend. a. How much will debt holders receive after paying taxes? b. By how much will the firm need to cut its dividends each year...
Calculate Apple's free cash flow if it has net operating profit after taxes of $60,000, depreciation...
Calculate Apple's free cash flow if it has net operating profit after taxes of $60,000, depreciation expense of $10,000, net fixed asset investment requirement of $40,000, a net current asset requirement of $30,000, and a tax rate of 30%.
ADVERTISEMENT
Need Online Homework Help?

Get Answers For Free
Most questions answered within 1 hours.

Ask a Question
ADVERTISEMENT