Q1J - depreciation). ABC's 2003 interest expense is the...

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BUSINESS 312: QUIZ NAME ______________________________ Student Number__________________________ Instructions: Open book and open notes. Work independently. Hand-in no additional sheets of paper; use the back of this quiz if you need more space. If you wish to have your quiz returned, use pen rather than pencil for your answer. Show your work for full marks. No washroom breaks during the examination period. The following information is available on the financial accounts of ABC Corporation. 2003 EBITDA 450 Depreciation ? Interest ? 2002 2003 Trade Capital ? ? Short-Term Debt ? ? Net Fixed Assets 300 630 Equity 517 700 Invested Capital ? NOTES: "Equity" represents the sum of all of the accounting equity accounts (that is, share- capital plus retained earnings). You can presume that depreciation for tax and for financial statement purposes is the same, and therefore, there is no deferred income tax or future income tax liability in this problem (i.e., capital cost allowance is the same as financial statement
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Unformatted text preview: depreciation). ABC's 2003 interest expense is the interest rate on short-term debt times short-term debt at the beginning of 2003 (year-end 2002). The interest rate on ABC's short-term debt is 8% per annum. ABC made capital expenditures of $365 at year-end 2003. Because these capital expenditures were at year-end, ABCs 2003 depreciation expense (also CCA) is a rate for depreciation times Net Fixed Assets at the beginning of 2003 (year-end 2002). ABC paid dividends to shareholders of $50 during 2003. ABC's tax rate is 40%. Also, during 2003, ABC sold new shares to new shareholders in the amount of $100 (no shares were repurchased). ABCs 2003 free cash flow was $253. Required: Determine the amount of ABCs short-term debt repayment or the increment to short-term debt borrowing at year-end 2003. Solution...
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This note was uploaded on 02/10/2011 for the course BUS 312 taught by Professor Alan during the Spring '03 term at Simon Fraser.

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Q1J - depreciation). ABC's 2003 interest expense is the...

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