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Galina-37 [17]
4 years ago
8

Continuing from Problem 1, at the end of the first year, Chemtec is expecting sales of $250 million and costs of $125 million. T

here are no more required investments in either net working capital or plant and equipment. However, the existing plant and equipment will experience \$50$50 million of depreciation. Assume that Chemtec's marginal tax rate on earnings is 35\5%. Assuming that all of these cash flow occur at the end of the first year, what is the first year's free cash flow
Business
1 answer:
Tanzania [10]4 years ago
3 0

Answer:

Free cash for first year is $98.75

Explanation:

Sales =                                  $250 million

Less: Costs =                        $125 million

Less: Depreciation =            <u>$50 million</u>

Earning before Tax =           $75 million

Less: Tax 35% (75 x 35%) = <u>$26.25 million</u>

Net Income =                        <u>$ 48.75 million</u>

Free cash flow = Net Income + Non cash Expenses - Increase in working capital - Capital Expenditure

Free cash flow = 48.75 million + 50 million - 0 - 0

Free cash flow = 98.75 million

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3 years ago
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I believe the correct answer from the choices listed above is the last option. Outsourcing and telecommuting are examples of technology workplace trend. Companies are utilizing the available technology they have in order to have lower and more effective costs. Hope this answers the question.

6 0
3 years ago
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Kobotan [32]

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3 years ago
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tankabanditka [31]

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