Unformatted text preview: ABC’s interest expense for 1999 is the interest rate on short-term debt times short-term debt at the beginning of 1999 (end of 1998). The interest rate on ABC’s short-term debt is 10% per annum. ABC made net capital expenditures of $365 at the end of 1999. Because these capital expenditures were at the end of 1999, ABC’s depreciation expense for 1999 (also CCA) is a rate for depreciation times net fixed assets at the beginning of 1999 (end of 1998) prior to the capital expenditure . The depreciation rate is 5% per annum. ABC paid dividends to shareholders of $50 during 1999. ABC’s tax rate is 40%. ABC had a free cash flow deficit of $100 for 1999. Required : Find ABC’s rate of return on invested capital for 1999, before tax and before depreciation, using beginning of period invested capital. Was ABC a net seller of common shares or a net repurchaser of its common shares in 1999? Solution...
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- Spring '03
- Business, Short-term Debt, Generally Accepted Accounting Principles