Ch_10_S_Key - Cf09Ch10Q1F11 Key 1 The difference between a...

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Ch 10 Q1 1 Cf09Ch10Q1F11 Key 1. The difference between a firm's future cash flows if it accepts a project and the firm's future cash flows if it does not accept the project is referred to as the project's: A. incremental cash flows. B. internal cash flows. C. external cash flows. D. erosion effects. E. financing cash flows. Refer to section 10.1 2. Which one of the following best describes pro forma financial statements? Refer to section 10.3 3. You are considering the purchase of a new machine. Your analysis includes the evaluation of two machines which have differing initial and ongoing costs and differing lives. Whichever machine is purchased will be replaced at the end of its useful life. You should select the machine which has the: Refer to section 10.6
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Ch 10 Q1 2 4. Three years ago, Knox Glass purchased a machine for a 3-year project. The machine is being depreciated straight-line to zero over a 5-year period. Today, the project ended and the machine was sold. Which one of the following correctly defines the aftertax salvage value of that machine? (T represents the relevant tax rate) Refer to section 10.4
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