Question

2. Which one of the following statements is true? Interest expense increases the amount of tax...

2. Which one of the following statements is true?

Interest expense increases the amount of tax due.

Depreciation does not affect taxes since it is a non-cash expense.

Taxes reduce both net income and operating cash flow.

Interest expense is included in operating cash flow.

1.Capital budgeting decisions include determining:

which one of two long-term projects to accept.

the amount of funds needed to finance customer purchases of a new product.

how much debt should be assumed to fund a project.

how much inventory will be needed to support a project.
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Answer #1

Answer to the Question No 2

Interest expense increases the amount of tax due. - False - Interest expense reduces the tax

Depreciation does not affect taxes since it is a non-cash expense. - False - Dep effects taxes

Taxes reduce both net income and operating cash flow. - True

Interest expense is included in operating cash flow. - False - Interest expense is included in Financing cash flow

Answer to the Question No 1

Capital budgeting decisios include

Which one of two long-term projects to accept - True

The amount of funds needed to finance customer purchases of a new product - False

How much debt should be assumed to fund a project - False - Debt Equity Ratio

How much inventory will be needed to support a project - False - Working Capital Management

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