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dexar
2 months ago
14

Beckham Broadcasting Company (BBC) has operating income (EBIT) of $2,500,000. The company's depreciation expense is $500,000 and

it has no amortization expense. The company is 100% equity financed. The company has a 40% tax rate, and its net investment in operating capital is $1,000,000.
What is BBC's free cash flow?


a. $0
b. $500,000
c. $900,000
d. $1,000,000
e. $1,500,000
Business
1 answer:
arsen [3.4K]2 months ago
4 0

Answer:

The right choice is option (D).

Explanation:

The scenario provides the following information:

Operating Income (EBIT) = $2,500,000

Depreciation Expense = $500,000

Tax rate = 40%

Net investment = $1,000,000

Thus, we can determine BBC's free cash flow using this formula:

= EBIT × (1 - Tax Rate) + Depreciation & Amortization - Net investment

Insert the values into the formula above:

So, the calculation becomes:

= $2,500,000 × (1 - 40%) + $500,000 - $1,000,000

= $1,500,000 + $500,000 - $1,000,000

= $1,000,000

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harina [3808]

Answer:

Total cost = $25,200

Explanation:

Based on the following data:

Unit variable cost = $12

Produced units - total cost:

June: 2,200 - $32,400

July: 600 - $13,200

August = 1,600 units

Initially, we must identify the fixed costs:

Fixed costs = total cost - total variable cost

June = 32,400 - 12*2,200= $6,000

July = 13,200 - 12*600= $6,000

Next, we can compute the total cost for 1,600 units

Total cost = 6,000 + 12*1,600= $25,200
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1 month ago
In early July, Damon Rutton purchased a $70 ticket to the December 15 game of the Sarasota Shippers. Parking for the game was ex
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The sunk cost amounts to $70. Sunk Cost describes an expense that has already been incurred and is non-recoverable. Typically, these costs are ignored in decision-making as they cannot be avoided regardless of the decisions made. In this scenario, Damon Rutton spent $70 on a ticket, which is the only pre-paid expense; any additional costs for parking or refreshments would only be incurred if he chooses to attend the game.
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Company XYY has recently won several bids and is now discussing how to structure the staff so that every contract can be success
Scilla [3833]

Answer:

Two organizational structures available to the company:

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4 0
3 months ago
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Fifteen years ago, Mr. Fairhold paid $50,000 for a single-premium annuity contract. This year, he began receiving a $1,300 month
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Response: $1091.61

Clarification:

Based on the inquiry, fifteen years ago, Mr. Fairhold invested $50,000 in a single-premium annuity contract, and this year, he began to receive a monthly payment of $1,300 that will last throughout his lifetime, with an expected total of $312,000. The taxable amount of each monthly payment for Mr. Fairhold is calculated as follows:

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