Financial Statements, Cash Flow, and Taxes - Solutions8

# Financial Statements, Cash Flow, and Taxes - Solutions8 -...

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Old Exam Questions - Financial Statements, Cash Flow, and Taxes - Solutions Page 71 of 73 Pages Less: Depreciation -\$900,000.00 -\$1,270,000.00 Net Fixed Assets \$2,100,000.00 \$2,430,000.00 Total Assets \$4,980,000.00 \$6,750,000.00 Accounts Payable \$1,200,000.00 \$1,800,000.00 Accruals \$300,000.00 \$450,000.00 Current Liabilities \$1,500,000.00 \$2,250,000.00 Debt \$500,000.00 \$900,000.00 Common Stock \$2,000,000.00 \$2,000,000.00 Retained Earnings \$980,000.00 \$1,600,000.00 Total Liability and Equity \$4,980,000.00 \$6,750,000.00 71. Based on the information above, determine the free cash flow (FCF) for 2007. A. - \$185,250 B. - \$169,750 C. - \$154,250 D. - \$177,500 * E. - \$162,000 There are a lot of different ways to solve this problem, simply choose the method you are most comfortable with. NOPAT = (EBIT)(1-T) = (\$1,430,000)(1-.4) = \$858,000 DEP = \$370,000 OCF = NOPAT + DEP = \$858,000 + \$370,000 = \$1,228,000 NOWC Y2006 = \$2,880,000 - \$1,500,000 = \$1,380,000 NOWC Y2007 = \$4,320,000 - \$2,250,000 = \$2,070,000

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## Financial Statements, Cash Flow, and Taxes - Solutions8 -...

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