Use the Tables for the Question(s)below

question 70

Multiple Choice

Use the tables for the question(s) below.
Pro Forma Income Statement for Ideko, 2013-2018
Pro Forma Assets & Liabilities for Ideko, 2013-2018

-Given the following data for a given period, compute the free cash flow to the firm. Net Income = $5 000
After-tax Interest Expense = $500
Depreciation = $500
Increase in NWC = $1 000
Capital Expenditures = $2 000

• A)$3 500
• B)$3 900
• C)$3 700
• D)$3 000

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Definitions:

Total Fixed Costs

The sum total of costs that are unaffected by changes in production levels or output.

Short-Run

A phase where production can be adjusted only by varying the amounts of variable inputs, with fixed inputs remaining constant.

Level of Output

The total quantity of goods or services produced by a company or economy at a given time.

Short Run

A time period in economics during which at least one input in the production process is fixed, affecting production capabilities.