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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: Your existing business generates $111,000 in EBIT. The corporate tax rate applicable to your business is 35%. The depreciation expense reported in the financial statements is $21, 143. You don't need to spend any money for new equipment in your existing cafes; however, you do need $16, 650 of additional cash. You also need to purchase $8, 880 in additional supplies-such as cloth table clothes and napkins, and more formal tableware-on credit. It is also estimated that your accruals, including taxes and wages payable, will increase by $5, 550. Based on your evaluation you have ______ in free cash flow
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