Answer:
The 350-day holding period rate of return on the investment is:
= 3.5%
Explanation:
a) Data and Calculations:
Investment = $2,504,600
Total receipts from investment = $2,592,400
Investment period = 350 days
Returns (dollars) = $87,800 ($2,592,400 - $2,504,600)
Rate of return = $87,800/$2,504,600 * 100
= 3.5%
b) The rate of return is calculated as ((Current value - Original value) / Original value) x 100. It shows, in percentage terms, the return earned by an investment over a period of time.
Answer:
Free cash flow to the firm = $326,000
Explanation:
The free cash flow to the firm can be computed using the following formula:
Free cash flow to the firm = Cash flow from operating activities + (Interest paid * (100% - Tax rate)) - Net capital expenditures ............... (1)
Where:
Cash flow from operating activities = $600,000
Interest paid = $40,000
Tax rate = 35%
Net capital expenditures = $300,000
Substituting the values into equation (1), we have:
Free cash flow to the firm = $600,000 + ($40,000 * (100% - 35%)) - $300,000 = $326,000
A is the answer to this question. Hope this helps!