Answer:
free cash flow is 2.352 million
Explanation:
Given data:
operating income is $2.30 million
depreciation $1.20
tax rate is 25%
free cash flow is calculated by using below formula
free cash flow = operating income ( 1- Tax) + depreciation - fixed working capital
= 2.75( 1 - 0.25) + 1.20 - 0.6
= 2.352 million
free cash flow is 2.352 million
Answer:
Arbitrage opportunity may exists as the ZCBs selling at different price at same time due to change in their YTM .
The PV of 100 face value zcb with different ytm are different , in this case.
for one year maturity with face value 100 current price = fv/ pv at 8% = 92.59
for Two year maturity with face value 100 current price = fv / Pv at 9% for two years = 84.167 , if the bond holder sell the bond after 1 year only, the price = 91.74 .
a) The arbitrage opportunity exist with buy two bond with face value 100 with maturity of 1 year and face value 110 with maturity of 2 years.
b) profit 0.01 , as difference between PV of both bond at their YTM rate.
Answer:
c. sunk cost.
Explanation:
Because in short run, fixed cost doesn't changes with output, that is whether we produce or not, we have to pay for it, so it is considered as Sunk cost. Also like Sunk cost, we don't make decisions with fixed costs.
managers can choose between three possible global ______, which range from selling the same product to introducing an entirely new product
