Lavalle Design Systems Ltd

question 18

Multiple Choice

Lavalle Design Systems Ltd. owns computer equipment that cost $10 million. It expects to use the equipment for 10 years and sell it for $100,000. Lavalle rents everything else. Lavalle generated sales of $10 million in the year just ended and has an operating profit margin of 30%. Lavalle faces a 20% tax rate. During the year working capital was reduced by $4 million and additional equipment worth $3 million was purchased at year end. What was Lavalle's free cash flow for the year assuming straight line depreciation is used?

• A) ($3,610,000)
• B) $990,000
• C) $2,390,000
• D) $3,400,000
• E) $4,390,000

---

Definitions:

Autonomy

The ability to make a knowledgeable and voluntary decision on one's own.

Well-Adjusted

Describes an individual who can cope adaptively with the demands of daily life and maintains positive relationships with others.

Obesity

A health issue defined by an overabundance of body fat, which poses a threat to well-being.

Early Death

Early death is a term used to describe a demise occurring before the average age of mortality in a given population.