Alpha Manufacturing Has the Following Financial Information for the Current

question 1

Multiple Choice

Alpha Manufacturing has the following financial information for the current year and projected for next year.Calculate its projected free cash flow to equity. $$\begin{array} { l r r } &\text { Current } \\& { \text { year } } & \text { Projected } \\\text { EBIT } & \$ 1,500 & \$ 1,800 \\\text { Operating assets } & \$ 3,000 & \$ 3,400 \\\text { Operating liabilities } & \$ 200 & \$ 220 \\\text { Total debt } & \$ 1,500 & \$ 1,800 \\\text { Interest rate on debt } & 6 \% & 6 \% \\\text { Tax rate } & 25 \% & 25 \%\end{array}$$

• A) $893
• B) $983
• C) $1,081
• D) $1,189
• E) $1,308

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Definitions:

Economy's Production

The total value of all goods and services produced within an economy over a specific time period.

Goods and Services

The physical items (goods) and activities (services) that satisfy human wants and needs and are offered in the marketplace for purchase.

GDP

Gross Domestic Product signifies the total monetary value of all goods and services produced within a country's boundaries over a predetermined time frame, reflecting the nation's economic health.

GDP Deflator

The GDP deflator is an economic metric that converts output measured at current prices into constant-dollar GDP.