Question

Your firm purchases a machine for $75,000 . You purchase the machine using current available cash-balances from a previous period.
You have sales from your retail customers of $540,000 .These customers pay with cash.
Your sales from commercial consumers are $65,000 .These customers pay with cash.
The cost of your overhead is $52,000 which you pay for with credit.

You have variable costs of $30,000 which you pay for with cash.
Your firm's tax rate is 20%
Finally, you collect on past accounts receivable for $15,000 and pay off past accounts payable for $8,000

ou have the following depreciation table

	Depreciation Percentage	$ Expense
Year 1	0.33
Year 2	0.45
Year 3	0.15
Year 4	0.07

With this information, what is the free cash-flow in year 1?

$398,600

$382,600

$332,350

$407,350

Answer 1

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