Answer:
Option D. $6.25 Million
Explanation:
The Free Cash Flow can be calculated using the following formula (Ignoring investment):
Free Cash Flow = (Revenue - Operating Expenses) Minus Tax
Here
Revenue is $20 Million
Operating Expenses are $12 Million
And
Tax is not given however tax rate is given which is 35% here. For tax purposes, we will assume that the depreciation is tax allowable expense, so
Tax = (Revenue - Operating Expenses - Depreciation) * Tax rate
By putting values we have:
Tax = ($20m - $12m - $3m) = $1.75 Million
The cash impact is taken while calculating the Free cash flow. This free cash flow method is also used in IRR, NPV, discounted payback method, etc.
By putting values in the above bold equation, we have:
Free Cash Flow = ($20m - $12m) - $1.75 = $6.25 Million
Answer:
A. hold money to transfer purchasing power into the future.
Explanation:
People use money as a store of value when they hold money to transfer purchasing power into the future.
Given:
Years to maturity =n= 20
Coupon rate = C = 7.8%
Frequency of payment =m= 2
Semiannual coupon = $1,000 × (0.078/2) = $39.00
Current market rate =i= 7%
Present value of bond = P
Price of bond = 0.078 x 1000 x (1 – (1 + 0.07)^-20/0.07 + 1000/ (1.07) ^20= 78 x 10.60= 826.33 + 258.42= 1,084.75
The correct answer is: $1,085
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A true because its like being repeated
