Venion A 17. One of the key changes A. True. in the 2017 Tax Cuts and Jobs Act i
ID: 2811292 • Letter: V
Question
Venion A 17. One of the key changes A. True. in the 2017 Tax Cuts and Jobs Act is a decrease in the federal corporate tax rate B. False. 18,As a result of the 2017 tax reform, interest expense is 100% tax dedacable to th A. True. corporatio. B. False. 19. If a company raises more money from issaing new long term debt than it pays in interest expense in a particular period, its cash flow to creditors will be negative. A. Trae. B. False If a firm is reporting its income in accordance with generally accepted accounting principles, then its net income as reported on the income statement should be oqual to its free eash flow A. True. B. False 21 . If you invest $100 at 12% for three years, how much would you have at the end of 3 years using sinik intcrest? A. $136 B. $140.49 C. $240.18 D. S312 E. $400 22 All else equal, the higher the discount rate, the lower the present value. A. True B. False 23. All else equal, the lower the discount rate, the lower the future value. A. True B. FalseExplanation / Answer
17) True. As per the new act, there is a decrease in corporate tax rate.
18) False. Interest expense was always 100% tax deductible even before the act.
19) True. As it as raised money from creditors, it is likely that its cash flow to them is negative.
20) False. Free Cash flows and net income are calculated in different ways and it has nothing to do with the accounting standards.
21) $136. In 3 years, total amount = P x (1 + r x n) = 100 x (1 + 12% x 3) = $136
22) True. Interest rates and present Value are inversely related. PV = FV / (1 + r)^n
23) True. Interest rates and future value are directly related. FV = PV x (1 + r)^n
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