Q1) The following relates to a potential capital investment project:

-Initial investment in working capital = $25,000

-Initial investment in equipment = $160,000

-Estimated annual sales = $150,000

-Estimated annual cash expenses related to operations = $71,000

-The equipment needed for the project has a 4-year useful life with $0 salvage value. The working capital will be released at the end of the project. The company has a 30% tax rate. A 23% discount rate is to be used to evaluate the project.

a) what is the project's net present value (NPV)? ________

b) what is the project's profitability index (assume that working capital needs are part of the initial investment required)? (Round to 3 decimal places XX.XXX%)_____________

c) should the company accept the project (YES OR NO)? why or why not? ___________________

Q2) Which of the following combinations is accurate?

Combination	Capital budgeting technique	Utilizes time value of money	utilizes cash flows
1	payback method	yes	yes
2	net present value method	yes	yes
3	internal rate of return	no	no
4	simple rate of return	no	yes

a) combination 1

b) combination 2

c) combination 3

d) combination 4

Q3) A company had the following:

-net cash provided by operating activities = $65,000

-capital expenditures = $85,000

-cash dividends = $5,000

How much was the company's free cash flow (FCF)? _________

Q4) A company reported the following details:

-costs of goods sold = $88,000

-increase in inventory = $44,000

-increase in accounts payable = $32,000

Using the direct method, how much is costs of goods sold adjusted to a cash basis? ___________

Q5) Which of the following is not a correct categorisation of a cash inflow/ outflow on the statement of cash flows under the indirect method?

a) sale of property, plant, and equipment = investing, increase

b) purchase of property, plant,, and equipment = investing, increase

c) increase in accounts receivable = operating, decrease

d) insurance of common stock = financing, increase

Q6) The following details were determined from a company's comparative balance sheets for the current and past year:

	Increase (decrease)
cash and cash equivalents	$18,600
accounts receivable	$13,300
inventory	($16,300)
prepaid expenses	$4,300
long-term investments	$10,300
property, plant, and equipment	$74,200
accumulated depreciation	$31,600
accounts payable	($19,400)
accrued liabilities	$17,600
income tax payable	$4,200
bonds payable	($63,600)
common stock	$41,600
retained earrings	$92,400

Net income for the current year is $96,500. The company paid a $4,100 cash dividend. No long-term investment or property, plant, and equipment was sold. No bonds payable were issued and no stock was repurchased. Answer the following questions using the indirect method for the preparation for the statement of cash flows.:

a) what is the net cash provided by (used in) operating activities? ____________

b) what is the net cash provided by (used in) investing activities? ______________

c) what is the net cash provided by (used in) financing activities? ______________