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Question
All of the following are useful purposes of pro forma financial statements EXCEPTA) they provide a useful tool for analyzing the effects of a firm's forecasts on its financial performance.
B) they satisfy the SEC requirement for audited financial disclosure.
C) they can be used to control, or monitor a firm's progress for a planning period.
D) they serve as a benchmark to compare actual results to planned activities.
Answer
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Related questions
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Current assets would usually NOT include
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B) marketable securities.
C) accounts receivable.
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c. If the bank requires discount interest, what is the annual percentage rate for this financing?
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B) The $4,000 may be expensed each year over the life of the project as part of the incremental free cash flows.
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Your company is considering the replacement of an old delivery van with a new one that is more efficient. The old van cost $40,000 when it was purchased 5 years ago. The old van is being depreciated using the simplified straight-line method over a useful life of 8 years. The old van could be sold today for $7,000. The new van has an invoice price of $80,000, and it will cost $6,000 to modify the van to carry the company's products. Cost savings from use of the new van are expected to be $28,000 per year for 5 years, at which time the van will be sold for its estimated salvage value of $18,000. The new van will be depreciated using the simplified straight-line method over its 5-year useful life. The company's tax rate is 35%. Working capital is expected to increase by $5,000 at the inception of the project, but this amount will be recaptured at the end of year five. What is the incremental free cash flow for year one?
A) $18,875
B) $19,985
C) $22,305
D) $24,220
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A new project is expected to generate $800,000 in revenues, $250,000 in cash operating expenses, and depreciation expense of $150,000 in each year of its 10-year life. The corporation's tax rate is 35%. The project will require an increase in net working capital of $85,000 in year one and a decrease in net working capital of $75,000 in year ten. What is the free cash flow from the project in year one?
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C) $380,000
D) $410,000
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A) $80,000
B) $84,000
C) $90,000
D) $94,000