App14C - Appendix 14C, Income Taxes in Capital Budgeting...

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Appendix 14C, Income Taxes in Capital Budgeting Decisions Question Type Difficulty LO1: Net present value LO2: Internal rate of return LO3: Uncertain cash flows LO4: Preference ranking LO5: Payback LO6: Simple rate of return LO7: (Appendix 14A) Present value concepts LO8: (Appendix 14C) Income tax Other topics Professional Exam Adapted ID Origin CMA/CPA origin 1 T/F H x 4/e: 15-903 Authors 2 T/F E x 6/e: 15-14 Authors 3 T/F H x 2/15/98,B E.N. 4 Conceptual M/ C M x ATB 8/e: 15-15 David Keyes 5 Conceptual M/ C M x 9eLD:CH15,Q2 Larry Deppe 6 Conceptual M/ C H x CMA CMA, 12/95, Part4, Q7 CMA CMA, 12/95, Part4, Q7 7 M/C H x ATB 8/e: 15-25 David Keyes 8 M/C M x ATB 8/e: 15-27 David Keyes 9 M/C M x 2/15/98,A7 E.N. 10 M/C M x 2/15/98,B7 E.N. 11 M/C M x 2/15/98,C7 E.N. 12 M/C M x 2/15/98,D7 E.N. 13 M/C E x 2/e: 14-11 Authors 14 M/C H x 2/e: 14-18 Authors 14C-1
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Appendix 14C, Income Taxes in Capital Budgeting Decisions 15 M/C E x 4/e: 15-917 Authors 16 M/C M x 4/e: 15-933 Authors 17 M/C M x 5/e: 15-25 Authors 18 M/C E x 5/e: 15-39 Authors 19 M/C H x CMA CMA,6/92,IV-11 CMA CMA, 6/92, IV-11 20 M/C M x 9eLD:CH15,Q5 Larry Deppe 14C- 1 21-25 Multipart M/C M x 10/13/2003 Multi MC C3 E.N. 14C- 2 26-27 Multipart M/C M x 10/13/2003 Multi MC E3 E.N. 14C- 3 28-29 Multipart M/C M x 10/13/2003 Multi MC F3 E.N. 30 Problem M x 7/10/2001,G6 E.N. 31 Problem M x 7/10/2001,H6 E.N. 32 Problem M x 10/14/2003 Problem J3 E.N. 33 Problem M x 10/14/2003 Problem K3 E.N. 14C-2
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True / False Questions 1. If a company is operating at a profit, all cash inflows associated with an investment project should be multiplied by one minus the tax rate to be placed on an after-tax basis. True False 2. If a company operates at a profit, the after-tax cost of a tax-deductible cash expense is determined by multiplying the cash expense by one minus the tax rate. True False 3. To determine the effect of income taxes on a project, multiply the net present value of the project by one minus the tax rate. True False Multiple Choice Questions 4. In a plant expansion capital budgeting decision, which of the following amounts would be affected by a change in the tax rate? A. the present value of the cash inflows from increased sales. B. the present value of the tax savings from the depreciation tax shield. C. the present value of the cost of building repairs needed in Year 8 of the project. D. all of these. 5. The calculation of the net present value of an investment project requires that the depreciation tax shield be included at: A. the amount of the depreciation with no adjustment for taxes. B. the amount of the depreciation times one minus the tax rate. C. the amount of the depreciation times the tax rate.
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App14C - Appendix 14C, Income Taxes in Capital Budgeting...

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