How Much Will a Firm Need in Cash Flow Before

question 70

Multiple Choice

How much will a firm need in cash flow before tax and interest to satisfy debt holders and equity holders if: the tax rate is 40%, there is $10 million in common stock requiring a 12% return, and $6 million in bonds requiring an 8% return? (Use the values in dollar.)

• A)$1,392,000
• B)$1,488,000
• C)$2,480,000
• D)$2,800,000

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Definitions:

Janitorial Department

A division within an organization dedicated to the maintenance and cleaning of buildings and facilities.

Allocated Based on Space

The distribution of resources or costs among departments or projects according to the physical area they occupy or require.

Personnel Department Cost

Expenses related to the operation of a human resources department, including salaries, training, and benefits administration.

Step-Down Method

An accounting method used to allocate the costs of service departments to producing departments and other service departments in a sequence.