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Abbott Laboratories is considering an investment project that generates a cash flow of $20,000 next year if the economy is favorable but generates only $10,000
Abbott Laboratories is considering an investment project that generates a cash flow of $20,000 next year if the economy is favorable but generates only $10,000 if the economy is unfavorable. The probability of favorable economy is 55% and of unfavorable economy is 45% The project will last only one year and be closed after that. The cost of investment is $15,000 and Abbott Laboratorios plans to finance the project with $3,000 of equity and $12,000 of debt. Assuming the discount rates of both equity and debt are 0%. What is the expected cash flow to Abbott Laboratories' creditors if the company invests in the project? $12,000 $11,100 $10,000 $8,000 SO OOO At the beginning of the year, long-term debt of a firm is $386,000. At the end of the year, long-term debt is $380,000. The interest paid is $60,000. What is the amount of the cash flow to creditors? $26,000 $60,000 $66,000 - $26,000 -$60,000
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