Question: Your existing business generates $ 8 7 , 0 0 0 in EBIT. The corporate tax rate applicable to your business is 3 5 %

Your existing business generates $87,000 in EBIT.The corporate tax rate applicable to your business is 35%.The depreciation expense reported in the financial statements is $16,571.You dont need to spend any money for new equipment in your existing cafes; however, you do need $13,050 of additional cash.You also need to purchase $6,960 in additional suppliessuch as tableclothes and napkins, and more formal tablewareon credit.It is also estimated that your accruals, including taxes and wages payable, will increase by $4,350.
Based on your evaluation, you havein free cash flow.

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