What is a spontaneous account

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1. A project will generate additional sales of $50,000 per year. Expenses to support the increase of sales will be $32,000 with depreciation expense of $5,000. If the tax rate is 30%, what will the differential cash flow be?

2. What is a spontaneous account?

3. As part of a capital budget, the equipment will be sold at the end of the project for $200,000. It will have a book value of $15,000. The tax rate is 30%. What is the net salvage value?

4. What is the ratio employed to determine valuation using the comparable multiples method?

5. Why does a company use the capital budgeting process?

6. Jackal Company has an operating leverage of 5.0, Lion, Inc. has an operating leverage of 3.2. What will happen if there is a 1% increase in sales of both firms?

7. Modigliani and Miller's capital structure theory has fallen into disuse. Why did that happen?

8. How would a company effect a leveraged buyout?

Reference no: EM132421224

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