Houston, Inc -What Is Houston's Free Cash Flow for All Debt and of Belt

question 11

Multiple Choice

Houston, Inc.
The following information pertains to Houston, Inc.a manufacturer of belt buckles:
$\begin{array}{l}\begin{array}{lll} \text { (dollar amounts in thousands) }\\ \text { Net Cash Flow from Operations}\\ \text { Interest Expense after tax}\\ \text { Decrease (Increase) in Cash}\\ \text { Required for Operations}\\ \text { Net Cash Flow from Investing}\\ \text { Net Cash from Debt Financing}\\\\ \text {Present Value Factors for 8.5 \% }\\\end{array}\begin{array}{lll}\underline {2012}&\underline {2013}&\underline {2014}&\underline {2015}&\underline {2016}&\underline {2017}\\ 564 & 628 & 854 & 1059 & 1345 & 1655 \\122 & 134 & 148 & 145 & 155 & 148 \\\\-75 & -54 & -48 & -32 & -61 & -48 \\-287 & -300 & -310 & -285 & -294 & -277 \\210 & 204 & 140 & 85 & -40 & -46 \\\\0.922 & 0.849 & 0.783 & 0.722 & 0.665 &\\\end{array}\end{array}$
-What is Houston's free cash flow for all debt and equity holders for year 2012?

• A) $564
• B) $399
• C) $324
• D) $202

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Definitions:

Marginal Revenue

The additional income generated from selling one more unit of a product or service.

Lump Sum

A significant amount of money paid all at once, as opposed to smaller payments or installments over time.

Fixed Costs

Costs that do not change with the level of production or sales, such as rent or salaries.

Average Total Costs

The total expenses incurred in the process of producing or offering a good or service, divided by the quantity of goods or services produced or offered.