Share Comments 7. If the corporate tax rate were to increase, one would expect a firm's depreciation tax shield to be which of the following, all else the same? A. More valuable. B. Less valuable. C. Unchanged, since depreciation doesn't change. D. Unchanged, because changes in tax rates don't matter once a project is in place. E. It is impossible to tell how it will change, if at all, without more information. 8. Sales $490,000; Costs $250,000, Depreciation $85,000. Tax rate is 30% Calculate the OCF and CCA tax shield given this information: A. OCF = $195,500; CCA tax shield = $28,000 B. OCF - $193,500; CCA tax shield = $28,900 C. OCF = $191,500; CCA tax shield = $29,800 D. OCF - $190,500; CCA tax shield = $30,700 E. OCF = $189,500; CCA tax shield = $31,600 9. A pro forma financial statement is one that A projects future years' operations. B. Is expressed as a percentage of the total assets of the firm. C. Is expressed as a percentage of the total sales of the firm. D. Is expressed relative to a chosen base year's financial statement. E. Reflects the past and current operations of the firm. 10. Which of the following is the best definition for opportunity cost? A. Depreciation method under Canadian tax law allowing for the accelerated write-off of property under various classifications B. A cost that has already been incurred and cannot be removed and therefore should not be considered in an investment decision. C. Evaluation of a project based on the project's incremental cash flows. D. Financial statements projecting future years' operations. E. The most valuable alternative that is given up if a particular investment is undertaken. Focus