1) Say that your firm's depreciable capital investment is $2 million. If you use the 7-year MACRS schedule for determining depreciation expense, how much will depreciation be for year 3?
$349,800.00
$249,800.00
$285,714.28
2) A capital budgeting project analysis at your firm currently shows Year 4 operating income of $400,000 million and depreciation of $100,000. If the relevant tax rate is 40.0%, what is Year 4 net incremental cash flow?
$340,000
$240,000
$500,000
3) If cash flows are likely to continue beyond the time frame of the capital budgeting project, then it is appropriate to estimate…
terminal value
salvage value
NPV + salvage value
4) Which of the following is not an adjustment made to NOPAT on the way to obtaining net incremental cash flows for a capital budgeting project?
Add back interest expense.
Add back depreciation.
Adjust for any reductions in cash flow from elsewhere in the firm as a result of this capital budgeting project