Question
In: Finance
A firm's operating income is 500,000 the depreciation on equipment over the last year is 50,000...
A firm's operating income is 500,000 the depreciation on equipment over the last year is 50,000 and the firm's tax rate is 30% fixed assets on the balance sheet increased by 100,000 over the last year. Operating capital has not changed over the last year. What was the capital spending over the last year?
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Expert Solution
As the Fixed Assets on the blanace sheet increased by $100,000 over the last year which means that Ending Net Fixed Assets minus Beginning net Fixed assets is equal to $100,000
Depreciation = $50,000
Net Capital Spending over the last year = Ending Net Fixed assets - Beginning Net Fixed assets + Depreciation over the last year
As, Ending Net Fixed assets - Beginning Net Fixed assets = $100,000
Net Capital Spending over the last year = $100,000+ $50,000
Net Capital Spending over the last year = $150,000
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