Which of the following statements is false regarding how the cash flow effects of the changes in the equipment and accumulated depreciation accounts would be reported on a statement of cash flows if the indirect method is used to prepare the operating activities section?
a. Cash proceeds from the sale of the equipment would be reported as a cash inflow in the investing activities section.
b. The cash paid to purchase equipment would be reported as a cash outflow in the investing activities section
c. Depreciation expense would be added to net income in the operating activities section.
d. A loss on the sale of the equipment would be subtracted from net income in the operating activities section
d
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Barnette Inc.'s free cash flows are expected to be unstable during the next few years while the company undergoes restructuring. However, FCF is expected to be $50 million in Year 5, i.e., FCF at t = 5 equals $50 million, and the FCF growth rate is expected to be constant at 6% beyond that point. If the weighted average cost of capital is 12%, what is the horizon value (in millions) at t = 5?
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