Cane Distribution, Inc., incorporated on 31 December 2009 with initial capital infusions of ($224),000 of debt and

Question:

Cane Distribution, Inc., incorporated on 31 December 2009 with initial capital infusions of $$224$,000 of debt and $$336$,000 of common stock, acts as a distributor of industrial goods. The company managers immediately invested the initial capital in fixed capital of

$$500$,000 and working capital of $$60$,000. Working capital initially consisted solely of inventory. The fixed capital consisted of nondepreciable property of $$50$,000 and depreciable property of $$450$,000. The depreciable property has a 10-year useful life with no salvage value. Exhibits 1, 2, and 3 provide Cane’s financial statements for the three years following incorporation. Starting with net income, calculate Cane’s FCFF for each year.

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