Question

Miser Materials paid $27,500 in dividends and $28,311 in interest over the past year while net working capital increased from $13,506 to $18,219. The company purchased $42,000 in net new fixed assets and had depreciation expenses of $16,805. During the year, the firm issued $25,000 in net new equity and paid off $21,000 in long-term debt. What is the amount of the cash flow from assets? O $30,811 O $36,189 O $49,811 O $51,811

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Answer #1

We shall only consider the items that actually have an impact on cash flow, hence depreciation will be ignored.

Cash inflow = Issue of new equity => 25,000

Cash outflow = Div paid + Int paid + long term debt paid => 27500 + 28311 + 21000 => 76,811

Amount of net cash flow from assets = cash outflow - cash inflow = 76811 - 25000 = 51,811

The answer is $51,811

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