Answer:
$6.25 million
Explanation:
Calculation for free cash flow
Using this formula
Free Cash Flow = (Revenues - Expenses-Depreciation) × (1–Tax rate) + Depreciation
Let plug in the formula
Free Cash Flow= ($20 million - $12 million - $3 million ) × (1–0.35) + $3 million
Free Cash Flow=($5 million*0.65)+$3 million
Free Cash Flow=$3.25million+$3 million
Free Cash Flow=$6.25 million
Therefore free cash flow for the first and only year of operation wiill be $6.25 million
Answer:
a. $ 2.8 million
Explanation:
Calculation to determine what The regret associated with the alternate decision would be
Using this formula
Regret associate=Payoff for best decision alternative - Payoff for one of the other alternatives
Let plug in the formula
Regret associate= $15.7million - $12.9million
Regret associate= $2.8million
Therefore The regret associated with the alternate decision is $2.8million.
Answer:
d. $132,000
Explanation:
Sigma Corporation holds the stock of Epsilon Corporation and is subsidiary for the Sigma. The dividend declared by of $100,000 is entirely for the sigma whereas Sigma Corporation also holds 20% of the shares of Intergalactic Corporation. The dividend of $40,000 will be calculated in the dividend amount of Sigma but 20% will be deducted.
$100,000 + $40,000 * 80% = $132,000
Answer:
Net increase in cash = $650
Explanation:
Note: This question is not complete. The complete question is therefore provided before answering the question. See the attached pdf for the complete question.
Also note: See the attached excel file for the statement of cash flows using the indirect method.
From the attached excel file, we have:
Net cash flow from operating activities = $830
Net cash flow from investing activities = $30
Net cash from financing activities = -$210
Net increase in cash = $650
<span class="sg-text sg-text--link sg-text--bold sg-text--link-disabled sg-text--blue-dark">
xlsx
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<span class="sg-text sg-text--link sg-text--bold sg-text--link-disabled sg-text--blue-dark">
pdf
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Answer:
D) Buy XYZZ stock and sell an XYZZ call
Explanation:
If the buyer is convinced that XYZZ stock has bottomed its price he should buy that stock since it's the cheapest it will get.
If he believes that XYZZ's price will soon rebound, then he should not sell a call option for XYZZ. f he sells a call option then his earnings will be very limited, since the price set at the call option will not be very high.
He should keep XYZZ stock for a while and wait for its price to rebound.
