1answer.
Ask question
Login Signup
Ask question
All categories
  • English
  • Mathematics
  • Social Studies
  • Business
  • History
  • Health
  • Geography
  • Biology
  • Physics
  • Chemistry
  • Computers and Technology
  • Arts
  • World Languages
  • Spanish
  • French
  • German
  • Advanced Placement (AP)
  • SAT
  • Medicine
  • Law
  • Engineering
Nastasia [14]
3 years ago
10

Nova Electrics anticipates cash flow from operating activities of $13 million in 20X1. It will need to spend $8.5 million on cap

ital investments to remain competitive within the industry. Common stock dividends are projected at $1.10 million and preferred stock dividends at $1.30 million.a. What is the firm’s projected free cash flow for the year 20X1? (Enter your answer in millions of dollars rounded to 2 decimal places.)b. What does the concept of free cash flow represent? A. Free cash flow equals cash flow from operating activities.B. Free cash flow represents the funds that are available for investing activities, such as purchasing plant and equipment assets.C. Free cash flow represents the funds that are available for special financing activities, such as a leveraged buyout.
Business
1 answer:
Maslowich3 years ago
8 0

Answer:

a.  $2.1 million

A. Free cash flow equals cash flow from operating activities.B. Free cash flow represents the funds that are available for investing activities, such as purchasing plant and equipment assets

Explanation:

a. The computation of the free cash flow is shown below:

= Cash flow from operating activities - capital investments - projected common stock dividend - preferred stock dividend

= $13 million - $8.5 million - $1.10 million - $1.30 million

= $2.1 million

b. The normal formula to compute the free cash flow is shown below:

= EBIT × (1 -Tax Rate) + Depreciation & Amortization - Change in Net Working Capital - net capital Expenditure.

This formula indicates the operating activities and the investing activities so option a and option b is taken together

You might be interested in
Bringham Company issues bonds with a par value of $540,000 on their stated issue date. The bonds mature in 6 years and pay 9% an
Vladimir [108]

Answer:

1. $24,300

2. 12

3. the bond is trading at a discount.

4. $470,090.86

5. <u>Journal Entry</u>

Cash $470,090.86 (debit)

Bond Payable $470,090.86 (credit)

Explanation:

<u>1. seml-annual Interest payment</u>

Seml-annual Interest payment = ($540,000 × 9 %) ÷ 2

                                                  = $24,300

<u>2. Number of seml-annual Interest payment</u>

Number of seml-annual Interest payment = 6 years × 2

                                                                     = 12

<u>3. Issue</u>

The annual market rate for the bonds (YTM) ,  12% is greater than the coupon rate of the bond 9%.

The Price will be less than the par value and we say that the bond is trading at a discount.

<u>4. Computation of the Issue Price, PV</u>

PMT = $24,300

n = 12

YTM = 12 %

FV = $540,000

p/yr = 2

PV = ?

Using a Financial Calculator, the Issue Price, PV is $470,090.86

<u>5. Journal Entry</u>

Cash $470,090.86 (debit)

Bond Payable $470,090.86 (credit)

4 0
3 years ago
Slick Sam has a special relationship with his banker. The nature of the relationship is as follows: The bank owes Sam $100 per y
kodGreya [7K]

Answer:

X=97.24

Explanation:

PV = Present Value = X+2000 by the 16th years

PMT = Payments = $100

FV = Future Value = 2000 at the end of 16 years

n= number of years

Applying the equation of future value for annuity

FV = pmt* ​((1+r)ⁿ - 1   )/r

Inputting the values;

2000=100*((1+r)¹⁶-1)/r

Solving for r, gives r = 2.9%

Therefore using the formula for PV for annuity;

PV=PMT*(1-(1/1+r)/r)

X=100*(1-(1/1.029)/0.029

X=100*((1-0.9718)/0.029)

X=100*(0.0282/0.029)

X=97.24

4 0
3 years ago
Fiona deposits $2,000 into a savings account. If the Fed requires a 20 percent reserve ratio, how much of Fiona’s money can the
Scrat [10]

the answer is B.)$1,600

6 0
3 years ago
Large loans for shopping centers are most likely to be made by
Nuetrik [128]

Large loans for shopping centers are most likely to be made by the bank funding the shopping center. When a person or the city/town decides to add a shopping center, the contract is drawn up and there is a bank funding the large loans. These loans are issued by the bank to help fund large projects to the city/town.

3 0
3 years ago
Which of the following provides essential project data including objective performance status, cost impact of known problems, id
mr_godi [17]

Answer:

The correct answer is letter "B": Integrated Program Management Report (IPMR).

Explanation:

The Integrated Program Management Report (<em>IPMR</em>) is a legally authorized report containing performance details extracted from the internal Earned Value Management System of the contractor. The IPMR provides an extract on the advance of the agreement including potential problems, costs, and change in schedules.

7 0
3 years ago
Other questions:
  • During the first year of operations, employees earned vacation pay of $35,000. The vacations will be taken during the second yea
    11·2 answers
  • For which of the following goods is the income elasticity of demand likely highest?
    7·1 answer
  • Monday Island produces only potatoes and oranges. Complete the following sentence. The marginal cost of a potato is the number o
    14·1 answer
  • The daily demand of an item is 1600 units. The average processing time is 30 seconds per unit. Containers (carrying 240 items) o
    14·1 answer
  • A local car dealer offers "zero percent" interest on a $20,000 automobile for 36 monthly payments. if a customer either pays cas
    9·2 answers
  • MHM Bank currently has $700 million in transaction deposits on its balance sheet. The current reserve requirement is 8 percent,
    6·1 answer
  • Which ones go in which box
    15·1 answer
  • Select all the words that are associated with Demand
    10·1 answer
  • How would a list of personal property and its worth help when
    6·2 answers
  • Which 3 should be entered as individual transactions, with their original dates, rather than entered using the initial journal e
    13·1 answer
Add answer
Login
Not registered? Fast signup
Signup
Login Signup
Ask question!