CFA Practice Question

There are 201 practice questions for this study session.

CFA Practice Question

Soft Corp.' FCFF should be ______.
A. -$24.85.
B. -$20.85.
C. -$22.85.
Explanation: FCInv = $125 - $100 = $25.
WC2005 = ($24 + $150) - ($101) = $73.
WC2004 = ($17 + $100) - ($91) = $26.
WCInv = $73 - $26 = $47.
t = $25 / $68 = 37%.
FCFF = NI + NCC + [Int(1 - t)] - FCInv - WCInv = $43 + $5 + [$5(1 - 0.37)] - $25 - $47 = -$20.85.

User Contributed Comments 4

User Comment
malawyer SINCE WHEN IS CASH NOT A PART OF CURRENT ASSETS and an increase in cash of 2 not part of the calc? Think about wanting my money back here...
malawyer I'm sorry, I am the m.....on - it was late and I will stop learning for today just now.
Paulvw Accounts payable snuck up and bit me ... damn.
jorgeandre I think there is a mistake in FCInv, it should add 5 due the accumulated depreciation, doesn't it? I see this as the company increase its PPE by 25 but also invest 5 extra but we can't see in the PPE but we see it in accumulated depreciation. What do you think?
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