Compute the Net Increase or Decrease in Cash Flows If

question 89

Multiple Choice

Compute the net increase or decrease in cash flows if Star Corporation had $250,000 in net income, $30,000 in depreciation expense, a decrease of $20,000 in A/R and an increase in bonds payable of $50,000.

• A)$370,000
• B)$350,000
• C)$280,000
• D)$310,000

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Definitions:

Stock Price

The price at which a particular share of stock is bought or sold in the market.

Risk-free Rate

The theoretical rate of return of an investment with zero risk, often represented by the yield on government bonds.

Call Option

A financial contract that gives the holder the right, but not the obligation, to buy a specified amount of an underlying asset at a set price before the contract expires.

Exercise Price

The price at which the holder of an option can buy (in the case of a call option) or sell (in the case of a put option) the underlying security or commodity.