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Unformatted text preview: operations with short term debt and with common equity. Borrowing or repayment of debt is undertaken by ABC at the end of the year . Therefore, ABCs interest charge on its income statement is equal to outstanding short-term debt at the beginning of 1997 (end of 1996) times the interest rate on this debt which is 7% per annum. Dividends for 1997 are $95. ABC issued shares in the amount of $200 of shares in 1997. Required: Based on the information at hand, and the definition(s) of free cash flow developed in class , find free cash flow for 1997 using both the operating and the financial definitions. Find ABCs 1997 rate of return on invested capital, after tax and after depreciation, using beginning of period invested capital. Solution...
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- Spring '03