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Suppose you are the only owner of a chain of coffee shops near universities. Your current cafs are doing well, but you are interested in
Suppose you are the only owner of a chain of coffee shops near universities. Your current cafs 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 $75,000 in EBIT. The corporate tax rate applicable to your business is 25%. The depreciation expense reported in the financial statements is $14,286. . You don't need to spend any money for new equipment in your existing cafs, however, you do need $11,250 of additional cash. . You also need to purchase $6,000 in additional supplies--such as tableclothes and napkins, and more formal tableware-on credit. It is also estimated that your accruals, including taxes and wages payable, will increase by $3,750. Based on your evaluation you have $63,036 in free cash flow. use of free Free cash flow can be used for various reasons, including distributing it to stockholders and debtholders. Which of the following is not cash flow? O Distributing dividends to stockholders Acquiring operating assets Save & Continue Continue wthout saving
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