Bartling Energy Systems recently reported $9,250 of sales, $5,750 of o

QUESTION

Bartling Energy Systems recently reported $9,250 of sales, $5,750 of operating costs other than depreciation, and $700 of depreciation. The company had no amortization charges, it had $3,200 of outstanding bonds that carry a 5% interest rate, and its federal-plus-state income tax rate was 35%. In or¦
Net income = sales operating costs depreciation interest tax = EBIT-Int-Tax Net income =[9250 5750 700] (3200*5%) tax Net income = [2,800] -160 “ tax¦¦¦¦¦¦¦.Note 160 is the amortization charge for Int payable on bonds. Also note that EBIT=2800 Tax = 2640*35%=$924.00 Net income =2640 924 =$1,716.00¦

¦¦¦¦¦..(a) FCF = EBIT(1-T) Deprn “ CapEx “ ? Net Op. WC ie FCF = 2800*(1-35%) 700 “ 1250 “ 300 = 970.00 ¦..(b) From (a) & (b) above So Net income exceed its free cash flow by 1716-970 = 746¦¦¦.Ans

ANSWER:

CLICK REQUEST FOR  AN EXPERT SOLUTION