HMWK6 Chapter 12 Questions
Weekly Homework: Answer the following questions and submit.
• Chapter 12: questions 1, 2, 3, 4, 5, 6, 7 and 8 on page 358 of the text. (3 hours) (W6.1 through W6.4).
Chapter 12 Questions
1. How is the pro forma statement we used in this chapter for computing OCF different from an accountant’s income statement? (LG12-1)
2. Suppose you paid your old college finance professor to evaluate a project for you. If you would pay him regardless of your decision concerning whether to proceed with the project, should his fee for evaluating the project be included in the project’s incremental cash flows? (LG12-2)
3. Why does a decrease in NWC result in a cash inflow to the firm?(LG12-3)
4. Everything else held constant, would you rather depreciate a project with straight-line depreciation or with DDB? (LG12-3)
5. Everything else held constant, would you rather depreciate a project with DDB depreciation or deduct it under a Section 179 deduction? (LG12-4)
6. In a replacement problem, would we ever see changes in NWC?(LG12-5)
7. In a replacement problem, will incremental net depreciation always be less than the gross depreciation on the
new piece of equipment? (LG12-5)
8. In a cost-cutting proposal, what might cause you to sometimes have negative EBIT?(LG12-6)
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Questions for HMWK6 Chapter 12
Weekly Homework: Please answer and submit the following questions.
• Chapter 12: on page 358 of the text, questions 1, 2, 3, 4, 5, 6, 7, and 8. (three hours) (W6.1 through W6.4).
Questions from Chapter 12
1. What distinguishes the pro forma statement used in this chapter for calculating OCF from an accountant’s income statement? (LG12-1)
2. Assume you hired your old college finance professor to appraise a proposal on your behalf. If you would pay him regardless of your decision concerning whether to proceed with the project, should his fee for evaluating the project be included in the project’s incremental cash flows? (LG12-2)
3. Why does a decrease in NWC result in a cash inflow to the firm?
(LG12-3)
4. Everything else
