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Suppose you are the only owner of a chain of coffee shops near universities. Your current cafes are doing well, but you are interested in
Suppose you are the only owner of a chain of coffee shops near universities. Your current cafes are doing well, but you are interested in starting a fine-dining restaurant. You decide to use the cash generated from your existing business to enter into a new business. Your accountant provides you with the following data on your current financial performance: Financial update as of June 15 . Your existing business generates $135,000 in EBIT * The corporate tax rate applicable to your business is 35%. * The depreciation expense reported in the financial statements is 25,714 You don't need to spend any money for new equipment in your existing cafes; however, You also need to purchase $10,800 in additional supplies-such as cloth tableclothes and It is also estimated that your accruals, including taxes and wages payable, will increase you do need $20,250 of additional cash napkins, and more formal tableware-on credit. by $6,750 Based on your evaluation you have $99,964 in free cash flow $104,014 $167,464 $180,964 Free cash flow can be usedo following is not a use of free cash f $99,964 cluding distributing it to stockholders and debtholders. Which of the O Acquiring operating assets O Repurchasing common stock
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