Answer:
145 millons free cash flow for the year
Explanation:
100 operating income
+ 15 depreciation (this expense do not involve cash, so they add up cash)
+50 long term asset sales (more cash in form of currency)
-10 capital expenditure (cash used purchase, mantaing or improve their assets)
-10 investment in working capital (we use it to adquire assets or pay liabilities)
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145 millons free cash flow for the year
The option that best describes the difference between stocks and bonds is <span>B.</span><span> Stocks allow investors to own a portion of the company; bonds are loans to the company.
When you have stocks, it means that you bought one "part" of a company, and in case that company gets sold one day, you will get a profit for what you bought. Bonds are quite the opposite - it is the money a company borrows from someone in order to pay something.</span>
Answer:
c. Mix of funds used to finance the project.
Explanation:
Most of the time businesses don't have the required funds to invest in projects especially capital intensive projects. So businesses raise long term finance from various sources, for example, from capital markets through issuance of shares/stocks and from debt sources through raising long term loans and debt instruments like bonds.
Now each source of finance has a different cost to the business depending upon the likely risks associated with each source of finance and nature of business itself. Therefore, businesses strive to assign such a cost of capital that primarily recovers the cost of finance and generate surplus wealth for the business. So the decision of what cost of capital should be assigned to a project primarily depends upon the the mix of funds used.
Secondly, risk level of the project might somehow effect the required rate of return expected by shareholders and/or debt providers but may not be the primary consideration in this decision.
