Question Details

How much free cash flow did Wells generate



1.	Zumbahlen Inc. has the following balance sheet. How much total operating capital does the firm have?

Cash	$  20.00	Accounts payable	$  30.00
Short-term investments	50.00	Accruals	50.00
Accounts receivable	20.00	Notes payable	    30.00
Inventory	    60.00	   Current liabilities	$110.00
   Current assets	$150.00	Long-term debt	70.00
Gross fixed assets	$140.00	Common stock	30.00
Accumulated deprec.	    40.00	Retained earnings	    40.00
Net fixed assets	$100.00	Total common equity	$  70.00
Total assets	$250.00	Total liab. & equity	$250.00

a.	$114.00
b.	$120.00
c.	$126.00
d.	$132.30
e.	$138.92




	2.	Barnes' Brothers has the following data for the year ending 12/31/12: Net income = $600; Net operating profit after taxes (NOPAT) = $700; Total assets = $2,500; Short-term investments = $200; Stockholders' equity = $1,800; Total debt = $700; and Total operating capital = $2,100. Barnes' weighted average cost of capital is 10%. What is its economic value added (EVA)?
a.	$399.11
b.	$420.11
c.	$442.23
d.	$465.50
e.	$490.00



	3.	Edwards Electronics recently reported $11,250 of sales, $5,500 of operating costs other than depreciation, and $1,250 of depreciation. The company had no amortization charges, it had $3,500 of bonds that carry a 6.25% interest rate, and its federal-plus-state income tax rate was 35%. How much was its net cash flow?
a.	$3,284.75
b.	$3,457.63
c.	$3,639.61
d.	$3,831.17
e.	$4,032.81






	4.	Wells Water Systems recently reported $8,250 of sales, $4,500 of operating costs other than depreciation, and $950 of depreciation. The company had no amortization charges, it had $3,250 of outstanding bonds that carry a 6.75% interest rate, and its federal-plus-state income tax rate was 35%. In order to sustain its operations and thus generate sales and cash flows in the future, the firm was required to spend $750 to buy new fixed assets and to invest $250 in net operating working capital. How much free cash flow did Wells generate?
a.	$1,770.00
b.	$1,858.50
c.	$1,951.43
d.	$2,049.00
e.	$2,151.45




	5.	HHH Inc. reported $12,500 of sales and $7,025 of operating costs (including depreciation). The company had $18,750 of investor-supplied operating assets (or capital), the weighted average cost of that capital (the WACC) was 9.5%, and the federal-plus-state income tax rate was 40%. What was HHH's Economic Value Added (EVA), i.e., how much value did management add to stockholders' wealth during the year?
a.	$1,357.13
b.	$1,428.56
c.	$1,503.75
d.	$1,578.94
e.	$1,657.88




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