Ref 11-1 Provo, Inc., Had Revenues of $10 Million, Cash Operating Expenses

question 82

Multiple Choice

Ref 11-1
Provo, Inc., had revenues of $10 million, cash operating expenses of $5 million, and depreciation and amortization of $1 million during 2008. The firm purchased $500,000 of equipment during the year while increasing its inventory by $300,000 (with no corresponding increase in current liabilities) . The marginal tax rate for Provo is 40 percent.
Reference: Ref 11-1
-Free cash flow: What is Provo's cash flow from operations for 2008?

• A) $2,400,000
• B) $2,600,000
• C) $3,400,000
• D) $4,000,000

---

Definitions:

Invisible Hand

A term coined by Adam Smith to describe the self-regulating behavior of the marketplace, where individual self-interests inadvertently contribute to the economy's overall health.

Childcare Center

A facility that provides care and education to young children during the working hours, facilitating parental employment.

Profitable

Describing a business or activity that generates more revenue than it costs to operate, resulting in a financial gain.

Centrally Planned Economies

Economic systems where decisions about production, investment, and distribution are made by the government rather than the market.