Homework Answers
17. EBITDA = $10,000-$5,000 =$5,000
Free Cash Flow to the company = {EBITDA *(1-TR)} + (D*TR) - LI -WC = 5000*.75 + 1000*.25 - 2,000- 500= $1,500
18. The present value of the annuity is mentioned in the
problem. Applying the formula given below,
PV = 10,000
r = 0.05
n= 0.05
We arrive that C= $ 2309.75
Since two payments are made, the remaining amount to be paid = $ (2309.75*5) - (2309.75*) = $6,929.25
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