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Chapter 14: Q3TI (page 752)

Question: Kalapono Company expects the following for 2018:

鈥� Net cash provided by operating activities of \(100,000.

鈥� Net cash provided by financing activities of \)10,000.

鈥� Net cash used for investing activities of \(20,000 (no sales of long-term assets).

鈥� Cash dividends paid to stockholders was \)2,000.

How much free cash flow does Kalapono expect for 2018?

Short Answer

Expert verified

Answer

Free cash flow expected by Kalapono is $78,000.

Step by step solution

01

Cash flow from operating activities 

The planned investment in long-term assets is deducted from the net cash provided by operating activities. Here, net cash used for investing activities will be deducted from the cash provided by operating activities.

02

Calculation of free cash flow Kalapono expect for 2018

Particulars

Amount($)

Net cash provided by operating activities

100,000

Cash payments planned for investments in long-term assets

(20,000)

Cash dividends

(2,000)

Free cash flow

78,000

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Most popular questions from this chapter

Question: If current assets other than cash increase, what is the effect on cash? What about a decrease in current assets other than cash?

Question: Preparing the statement of cash flows鈥攄irect method The income statement and additional data of Value Corporation follow:

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