Question
In: Finance
Dino Drilling recently reported $8,250 of sales, $4,500 ofoperating costs other than depreciation, and $950...
Dino Drilling recently reported $8,250 of sales, $4,500 of operating costs other than depreciation, and $950 of depreciation. The company had no amortization charges, it had $3,250 of outstanding bonds that carry a 6.75% interest rate, and its combined federal and provincial income tax rate was 35%. In order to sustain its operations and thus generate sales and cash flows in the future, the firm was required to spend $750 to buy new fixed assets and to invest $250 in net operating working capital. How much free cash flow did Dino Drilling generate?
Solutions
Expert Solution
The free cash flow is computed as shown below:
= [ Sales - Operating cost other than depreciation - depreciation) x (1 - tax rate) ] + depreciation - purchase of new fixed assets - investment in net operating working capital
= [ $ 8,250 - $ 4,500 - $ 950) x (1 - 0.35) ] + $ 950 - $ 750 - $ 250
= $ 2,800 x 0.65 - $ 50
= $ 1,820 - $ 50
= $ 1,770
jeff jeffy answered 2 years agoRelated Solutions
Last year, Stewart-Stern Inc. reported $11,250 of sales, $4,500 of operating costs other than depreciation, and...
Last year, Stewart-Stern Inc. reported $11,250 of sales, $4,500
of operating costs other than depreciation, and $1,250 of
depreciation. The company had $3,500 of bonds outstanding that
carry a 6.50% interest rate, and its federal-plus-state income tax
rate was 35.00%. During last year, the firm had expenditures on
fixed assets and net operating working capital that totaled $2,000.
These expenditures were necessary for it to sustain operations and
generate future sales and cash flows. This year's data are expected
to...
Houston Pumps recently reported $172,500 of sales, $140,500 of operating costs other than depreciation, and $9,250 of depreciation.
Houston Pumps recently reported $172,500 of sales, $140,500 of
operating costs other than depreciation, and $9,250 of
depreciation. The company had $35,250 of outstanding bonds that
carry a 6.75% interest rate, and its federal-plus-state income tax
rate was 25%. In order to sustain its operations and thus generate
future sales and cash flows, the firm was required to spend $15,250
to buy new fixed assets and to invest $6,850 in net operating
working capital. What was the firm's free cash...
AT&T recently reported (in millions) $8,250 of sales, $5,750 of operating costs other than depreciation, and...
AT&T recently reported (in millions) $8,250 of sales,
$5,750 of operating costs other than depreciation, and $1,100 of
depreciation. The company had $3,200 of outstanding bonds that
carry a 5% interest rate, and its federal-plus-state income tax
rate was 35%. In order to sustain its operations and thus generate
future sales and cash flows, the firm was required to make $1,250
of capital expenditures on new fixed assets and to invest $300 in
net operating working capital. By how much...
Shrives Publishing recently reported $11,500 of sales, $5,500 of operating costs other than depreciation, and $1,250...
Shrives Publishing recently reported $11,500 of sales, $5,500 of
operating costs other than depreciation, and $1,250 of
depreciation. The company had $3,500 of bonds that carry a 6.25%
interest rate, and its federal-plus-state income tax rate was 25%.
During the year, the firm had expenditures on fixed assets and net
operating working capital that totaled $1,550. These expenditures
were necessary for it to sustain operations and generate future
sales and cash flows. What was its free cash flow? (Round your...
Shrives Publishing recently reported $11,750 of sales, $5,500 of operating costs other than depreciation, and $1,250...
Shrives Publishing recently reported $11,750 of sales, $5,500 of
operating costs other than depreciation, and $1,250 of
depreciation. The company had $3,500 of bonds that carry a 6.25%
interest rate, and its federal-plus-state income tax rate was 35%.
During the year, the firm had expenditures on fixed assets and net
operating working capital that totaled $1,550. These expenditures
were necessary for it to sustain operations and generate future
sales and cash flows. What was its free cash flow? (Round your...
Watson Oil recently reported (in millions) $8,250 of sales, $5,750 of operating costs other than depreciation,...
Watson Oil recently reported (in millions) $8,250 of sales,
$5,750 of operating costs other than depreciation, and $850 of
depreciation. The company had $3,200 of outstanding bonds that
carry a 5% interest rate, and its federal-plus-state income tax
rate was 25%. In order to sustain its operations and thus generate
future sales and cash flows, the firm was required to make $1,250
of capital expenditures on new fixed assets and to invest $300 in
net operating working capital. By how...
Boston Inc. recently reported $125,000 of sales, $75,500 of operating costs other than depreciation, and $10,200...
Boston Inc. recently reported $125,000 of sales, $75,500 of
operating costs other than depreciation, and $10,200 of
depreciation. The company had $16,500 of outstanding bonds that
carry a 7.25% interest rate, and its federal-plus-state income tax
rate was 40%. How much was the firm's net income? The firm uses the
same depreciation expense for tax and stockholder reporting
purposes. (Round your intermediate and final answers to two decimal
places.)
Sugar Land Inc. recently reported $15,000 of sales, $7,500 of operating costs other than depreciation, and...
Sugar Land Inc. recently reported $15,000 of sales, $7,500 of
operating costs other than depreciation, and $1,200 of
depreciation. The company had no amortization charges, it had
outstanding $6,500 of bonds that carry a 6.25% interest rate, and
its federal-plus-state income tax rate was 35%. How much was the
firm's net income after taxes?
a. $3,284.55
b.$3,457.42
c.$3,639.39
d.$3,830.94
e.$4,022.48
Watson Oil recently reported (in millions) $8,250 of sales, $5,750 of operating costs other than depreciation,...
Watson Oil recently reported (in millions) $8,250 of sales,
$5,750 of operating costs other than depreciation, and $800 of
depreciation. The company had $3,200 of outstanding bonds that
carry a 5% interest rate, and its federal-plus-state income tax
rate was 35%. In order to sustain its operations and thus generate
future sales and cash flows, the firm was required to make $1,250
of capital expenditures on new fixed assets and to invest $300 in
net operating working capital. By how...
Houston Pumps recently reported $232,500 of sales, $140,500 of operating costs other than depreciation, and $9,250...
Houston Pumps recently reported $232,500 of sales, $140,500 of
operating costs other than depreciation, and $9,250 of
depreciation. The company had $35,250 of outstanding bonds that
carry a 6.75% interest rate, and its federal-plus-state income tax
rate was 35%. In order to sustain its operations and thus generate
future sales and cash flows, the firm was required to spend $15,250
to buy new fixed assets and to invest $6,850 in net operating
working capital. What was the firm's free cash...
ADVERTISEMENT
ADVERTISEMENT
Latest Questions
- Search the Internet to find (at least 2 websites) related to the general field of malware....
- Consider the following schema: Suppliers(sid, sname, address) Parts(pid, pname, color) Catalog(sid, pid, cost) write the following...
- Singh Development Co. is deciding whether to proceed with Project X. The cost would be $12...
- CS2123 Data Structures - Fall 2019 Assignment 1: Function Runtimes Table Due 9/11/19 by 11:59pm Completing...
- Question 2. Design a 16-1 MUX using any number of lower MUXs, such as 8-1 or...
- . Write a function that takes, as arguments, two objects, value1 and value2. If
- Wii Brothers, a game manufacturer, has a new idea for an adventure game. It can market...
ADVERTISEMENT