In the Fourth and Final Year of a Project, SVC

question 36

Multiple Choice

In the fourth and final year of a project, SVC expects operating cash flow of $440,000. The project required an $80,000 investment in working capital at the beginning. Of that amount, $60,000 will be recovered in year 4. Machinery associated with the project will be sold for exactly its undepreciated value of $15,000. Total free cash flow for the fourth year is

• A) $75,000.
• B) $1,500,000.
• C) $515,000.
• D) $535,000.

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Definitions:

Government Entity

An organization that operates within the public sector, often funded by taxation and responsible for providing public services.

Managing Director

A corporate executive responsible for the daily operations and overall management of the company.

Doubtful Debts

Accounts receivable that a company believes are unlikely to be collected due to the debtor's financial difficulties.