Morris Motors just purchased some MACRS 5-year property at a cost of $216,000

Pro forma statements for a proposed project should: I. be compiled on a stand-alone basis. II. include all the incremental cash flows related to the project. III. generally exclude interest expense. IV. include all project-related fixed asset acquisitions and disposals.    A.  I and II only B.  II and III only C.  I, II, and IV only D.  II, III, and IV only E.  I, II, III, and IV Refer to section 10.3

26.

Which one of the following statements is correct?    A.  Project analysis should only include the cash flows that affect the income statement. B.  A project can create a positive operating cash flow without affecting sales. C.  The depreciation tax shield creates a cash outflow for a project. D.  Interest expense should always be included as a cash outflow when analyzing a project. E.  The opportunity cost of a company-owned building that is going to be used in a new project should be included as a cash inflow to the project. Refer to section 10.6

27.

A company that utilizes the MACRS system of depreciation:    A.  will have equal depreciation costs each year of an asset's life. B.  will have a greater tax shield in year two of a project than it would have if the firm had opted for straight-line depreciation, given the same depreciation life. C.  can depreciate the cost of land, if it so desires. D.  will expense less than the entire cost of an asset. E.  cannot expense any of the cost of a new asset during the first year of the asset's life. Refer to section 10.4

28.

Morris Motors just purchased some MACRS 5-year property at a cost of $216,000. Which one of the following will correctly give you the book value of this equipment at the end of year 2?        A.  $216,000/(1 + 0.20 + 0.32) B.  $216,000 × (1 - 0.20 - 0.32) C.  $216,000 × (0.20 + 0.32) D.  [$216,000 × (1 - 0.20)] × (1 - 0.32) E.  $216,000/[(1 + 0.20)(1 + 0.32)] Refer to section 10.4