Question

Which one of the following is the reason for the need of adjusting the tax amount when valuing a firm using the cash flow from assets approach Multiple Choice O The tax effect of the dividend payments must be eliminated C) Only straight line depreciation can be used when computing taxes for valuation purposes O Taxes must be computed for valuation purposes based solely on the marginal tax rate < Prey 7 of 30 Next > search

Answer 1

Answers Page. No o The Enberesf expense is not a part of operating expense of the company and company's cash blows from assets takes into account all the operating cash flows, capital spending and networking capital. And abo the interest expense would be added to the Cash flowers to dettholders instead. Due to these reasons, the fare effect of the interest expense muesti be removed is the oreason for the need of adjusting the fase amount when valuing a firm using the Cash flow from anetos appicach .. The option @ is correct Answer → The tax effect of the interest expense must be removed.