Question 3

In 2012, net cash provided by operations for ABC Company

was $106,484. The company spent $702 on property and plant. It also acquired another company costing $31,536.

Additionally, the company paid its debt of $25,000, and dividend of $29,377.

The company made an interest revenue of $50 and paid an interest of

$394. The tax rate is 35%.

(a Calculate the amount of free cash flows for

all debt and

equity shareholders for ABC

Company for year 2012

.

(b) Calculate the amount of free cash flows for common

equity shareholders for ABC Company

for year 2012.