Question

Champagne, Inc., had revenues of $12 million, cash operating expenses of $8 million, and depreciation and...

Champagne, Inc., had revenues of $12 million, cash operating expenses of $8 million, and depreciation and amortization of $1.5 million during 2018. The firm purchased $500,000 of equipment during the year while increasing its inventory by $700,000 (with no corresponding increase in current liabilities). The marginal tax rate for Champagne is 30 percent.

Free cash flow: What are Champagne's cash flows associated with investments for 2018?

A) $500,000 B) $700,000 C) $1,200,000 D) None of the above.

Free cash flow: What is Champagne's cash flow from operations for 2018?

A) $2,050,000 B) $2,500,000 C) $3,250,000 D) $4,000,000

Free cash flow: What is Champagne's free cash flow for 2018?

A) $2,050,000 B) $2,500,000 C) $3,250,000 D) $4,000,000

What is the terminal year after-tax cash flow from the recovery of working capital?

A) $0 B) $700,000 C) $500,000 D) None of the above

Business   Finance   
0 0
Add a commentTranscribed image text
Next >

Homework Answers

Answer #1

What are Champagne's cash flows associated with investments for 2018?

C) $1,200,000

Cash flows associated with investments = Capital Investment + Change in Working Capital

Cash flows associated with investments = 500000 + 700000

Cash flows associated with investments = $1200000

Free cash flow: What is Champagne's cash flow from operations for 2018?

C) $3,250,000

Cash flow from operations= (Revenue - Costs ) * (1 - Tax) + Depreciation * tax

Cash flow from operations= (12000000 - 8000000) * (1 - 0.30) + 1500000 * 30%

Cash flow from operations= $3250000

Free cash flow: What is Champagne's free cash flow for 2018?

A) $2,050,000

FCF = Cash flow from operations - Cash flow from investments

FCF = 3250000 - 1200000

FCF = $2050000

What is the terminal year after-tax cash flow from the recovery of working capital?

B) $700,000

Please upvote if satisfied

0 0
Know the answer?
Your Answer:

Post as a guest

Your Name:

What's your source?

Earn Coins

Coins can be redeemed for fabulous gifts.

Log In

Sign Up

Not the answer you're looking for?
Ask your own homework help question
Similar Questions
Champagne, Inc., had revenues of $12 million, cash operating expenses of $8 million, and depreciation and...
Champagne, Inc., had revenues of $12 million, cash operating expenses of $8 million, and depreciation and amortization of $1.5 million during 2008. The firm purchased $700,000 of equipment during the year while increasing its inventory by $500,000 (with no corresponding increase in current liabilities). The marginal tax rate for Champagne is 30 percent. What is Champagne's Cash flow from operations? What is the free cash flow for 2008? A)$2,050,000 B)$2,500,000 C)$3,250,000 D)$4,000,000
Please Answer Milk Inc. had operating income of $2.3 million, depreciation of $1.20 million, and a...
Please Answer Milk Inc. had operating income of $2.3 million, depreciation of $1.20 million, and a tax rate of 25% on its most recent financial statement.  Milk spent $700,000 on new fixed and current assets, but increased current liabilities by $100,000 too. What was Milk's free cash flow, in millions? a. $2.44 b. $2.325 c. $1.96 d. $2.22 e. $2.06 Frank Corp. bonds have a market price of $1,250, a par value of $1,000, and have 15 years to maturity. The...
A firm's cash flow from operations is $40 million, depreciation is $2 million, its investments in...
A firm's cash flow from operations is $40 million, depreciation is $2 million, its investments in fixed capital totals $14 million, its after-tax interest totals $4 million and its investment in working capital totals $4 million. During the year the firm borrowed $5 million. The tax rate is 30%. What is its Free Cash Flow to Equity? Select one: a. $41.00 million b. $31.00 million c. $29.00 million d. $42.20 million
XYZ Company, a 'for-profit' business, had revenues of $15 million in 2018. Expenses other than depreciation...
XYZ Company, a 'for-profit' business, had revenues of $15 million in 2018. Expenses other than depreciation totaled 75 percent of revenues, and depreciation expense was $1.3 million. XYZ Company, must pay taxes at a rate of 40 percent of pretax (operating) income. All revenues were collected in cash during the year, and all expenses other than depreciation were paid in cash. What was XYZ’s profit margin? A: 2.3% B: 5.7% C: 7.5% D: 9.8%
XYZ Company, a 'for-profit' business, had revenues of $12 million in 2016. Expenses other than depreciation...
XYZ Company, a 'for-profit' business, had revenues of $12 million in 2016. Expenses other than depreciation totaled 75 percent of revenues, and depreciation expense was $1.5 million. XYZ Company, must pay taxes at a rate of 40 percent of pretax (operating) income. All revenues were collected in cash during the year, and all expenses other than depreciation were paid in cash.   What was XYZ's total cash flow?
4. Last year Flying Tiger Inc. had operating revenues of $34.2 million. Its cost of goods...
4. Last year Flying Tiger Inc. had operating revenues of $34.2 million. Its cost of goods sold and selling expenses amounted to $31.4 million. Depreciation was $3.1 million. There are no income taxes and no interest expense. Assume that there was no change in working capital during the year. (a) What was Flying Tiger’s Net Income for the year? (b) What was Flying Tiger’s Operating Cash Flow for the year? Explain the intuition for the difference between income and operation...
XYZ Corp. had operating income this year of $120 million and is in the 40% tax...
XYZ Corp. had operating income this year of $120 million and is in the 40% tax bracket. The firm carried $200 million in debt at a cost of 10% interest. This year's depreciation expense was $30 million. XYZ Corp. has budgeted $40 million in capital spending and an additional $5 million in non-cash working capital. No change is anticipated in the company's net debt. What is XYZ Corp.'s expected free cash flow to equity (FCFE)? Select one: A. $15 million...
Year 1 2 3 4 Free Cash Flow $12 million $18 million $22 million $26 million...
Year 1 2 3 4 Free Cash Flow $12 million $18 million $22 million $26 million Conundrum Mining is expected to generate the above free cash flows over the next four years, after which they are expected to grow at a rate of 5% per year. If the weighted average cost of capital is 11% and Conundrum has cash of $85 million, debt of $65 million, and 30 million shares outstanding, what is Conundrumʹs expected current share price? A) $12.61...
Garey, Inc. had sales for 2019 of $500,000, and EBITDA was 25% of sales. Furthermore, depreciation...
Garey, Inc. had sales for 2019 of $500,000, and EBITDA was 25% of sales. Furthermore, depreciation was $13,000, interest was $8,500, the corporate tax rate was 21%, and the company pays 10% of its net income as dividends. Given this information and the balance sheets below, calculate the free cash flow for 2019. a. $92,430 b. $98,080 c. $89,730 d. $91,280 e. None of the above is within $10 of the correct answer.
XYZ Company, a 'for-profit' business, had revenues of $12 million in 2016. Expenses other than depreciation...
XYZ Company, a 'for-profit' business, had revenues of $12 million in 2016. Expenses other than depreciation totaled 75 percent of revenues. XYZ Company, must pay taxes at a rate of 40 percent of pretax (operating) income. All revenues were collected in cash during the year, and all expenses other than depreciation were paid in cash. Depreciation originally was $1.5 million; however, a change in the depreciation schedule (still within GAAP) has now made the depreciation expense DOUBLE. Based on this...
ADVERTISEMENT
Need Online Homework Help?

Get Answers For Free
Most questions answered within 1 hours.

Ask a Question
ADVERTISEMENT