Question

Hopewell Corporation had Net Income for 2017 of $7,300,000. The firm invested $3,000,000 in manufacturing equipment during 2017. The equipment is being depreciated over five years using straight-line depreciation, starting in 2017. Assuming no other adjustments to cash flow than those mentioned here, create a statement of cash flows for 2017 with amounts in thousands. What is the Net Cash Flow in 2017? Please specify your answer in the same units as the statement of cash flows

Answer 1

Hopewell Incorporation
Statement of Cash flow
For the Year 2017
(amounts in thousands)
Cash flow from operating Activities:
Net Income			$             7,300
Depreciation Expense			$ 600
Net Cash provided by operating activities			$             7,900
Cash flow from Investing activities:
Investment in Equipment			$           -3,000
Net Cash used in Investing activities			$           -3,000
Net Cash flow for the year			$             4,900
Working:
Depreciation under Straight Line method		=	(Cost - Salvage Value)/Useful Life
		=	(3000000-0)/5
		=	$       6,00,000