1. The term "capital structure" refers to:
the amount of current versus long-term debt on the balance sheet.
the amount of current versus fixed assets on the balance sheet.
the amount of long-term debt versus equity on the balance sheet.
none of these.
2. A capital budgeting project analysis at your firm currently shows Year 2 operating income of $1.5 million and depreciation of $500,000. If the relevant tax rate is 40.0%, what is Year 2 net incremental cash flow?
a) $900,000
b) $2.0 million
c) $1.4 million