2. RipplingBrook Mining Co. had operating cashflow equal to $50,000. Depreciation expense during the year was...

2. RipplingBrook Mining Co. had operating cashflow equal to $50,000. Depreciation expense during the year was $7,500. Interest expense was $3,000 and the company paid down $3,500 in long term debt. The company spent $20,000 on new equipment and had an increase in working capital of $1,000. What was the cash flow to stockholders?

Expert Solution

Particulars	Amount
Operating Cashflow	$ 50,000
Less: Interest Exp	$ -3,000
Net Operating Cashflow	$ 47,000
Add: Depreciation	$ 7,500
Less: Increase in Working capital	$ -1,000
Cash flows from Operating Activities(A)	$ 53,500

Cashflows from Investing Activities
Purchase of New Equipment	$ -20,000
Cashflows from Investing Activities(B)	$ -20,000

Cash flows from Financing activities
Long Term Debt paid	$ -3,500
Cash flows from Financing activities©	$ -3,500

Cash flows to Stockholders(A+B+C)	$ 30,000

Assumed that Interest expense hasnotbeen included in Operating cashflow of $ 50,000 and interest exp hasbeen deducted accordingly.

Since no Tax Rate hasbeen given Taxsavings on Interest exp is not considered.

jeff jeffy answered 2 years ago

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2. RipplingBrook Mining Co. had operating cashflow equal to $50,000. Depreciation expense during the year was...

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