13) If a firm pays taxes, which one of these will reduce net income but increase cash flow? 13) A) Cash sales C) Depreciation expense B) Interest expense D) Income taxes 14) An individual's income for the year includes both dividend and interest payments. Which of these statements correctly applies to that individual's tax liability? 14) A) Dividends are taxed; tax on interest payments is paid at the corporate level. B) Both dividend and interest payments are taxed at the personal level. C) All taxes on dividend and interest payments are paid at the corporate level. D) Interest is taxed; tax on dividend payments is paid at the corporate level 15) What happens to the market value of a firm's equity as the book value of the firm's 15 equity increases? A) It remains constant. B) It decreases by the same amount. C) It increases by the same amount. D) There is no set relationship to determine this outcome. 16) What is the change in cash for a firm with the following: $10,000 cash flow from 16) operations, $1,600 cash used for new investment, a reduction in the level of debt of $2.000, S1,000 in cash dividends, and $200 in depreciation expense? A) $9,600 B) $9,400 C) $5,400 D) $5,600 17) Which one of these would not be paid from free cash flow? A) Cash dividends B) New equipment purchase C) Repayment of principal on a long-term debt D) Repurchase of outstanding shares of common stock 18) If a firm's net income is positive and its noncash expenses are positive, which of the18) following could account for a negative amount of cash provided by operations? A) Current assets decrease more than current liabilities increase. B) A large addition is made to plant and equipment. C) Current assets decrease more than current liabilities decrease. D) Current assets increase more than current liabilities increase. 19) What is the ROE for a firm with a times interest earned ratio of 2, a tax liability of S1 19) million, and interest expense of $1.5 million if equity equals $1.5 million? A) 50.00% B) 33.33% C) 26.67% D) 30.00%