a. Using the data for Fincorp, determine the cash flow from assets, cash flow to bondholders, cash
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b. Assuming that Fincorp's tax rate is 28%, calculate its after-tax interest expense. Why is it appropriate to convert the interest expense to its aftertax cost but not appropriate to adjust dividends?
c. Using the after-tax interest expense, recalculate cash flow from assets and financing flow. Compare with your answers in problem (a). In what ways are the values different?
Here are some data on Fincorp, Inc., that you should use. Fincorp follows IFRS. The statement of financial position items correspond to values at year-end of 2014 and 2015, while the statement of comprehensive income items correspond to revenues or expenses during the year ending in either 2014 or 2015. All values are in thousands of dollars.
Cash Flow From Assets
Cash flow from assets is the aggregate total of all cash flows related to the assets of a business. This information is used to determine the net amount of cash being spun off by or used in the operations of a business. The concept is comprised of...
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Related Book For
Fundamentals of Corporate Finance
ISBN: 978-1259024962
6th Canadian edition
Authors: Richard Brealey, Stewart Myers, Alan Marcus, Devashis Mitra, Elizabeth Maynes, William Lim
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