Calculate total amount of term A repaid in year 1 post deal using assumptions below. Assume there are no mandated repayments, and all available cash flows can be used for debt repayment. Assume cash taxes paid is after allowing for the tax shield on interest payments. Assume interest is calculated on beginning balances. a) 163.2 b) 194.4 c) 247.1 d) 333.6 *Answer is 163.2 - please provide explanation

Calculate total amount of term A repaid in year 1 post deal using assumptions below. Assume there are no mandated repayments, and all available cash flows can be used for debt repayment. Assume cash taxes paid is after allowing for the tax shield on interest payments. Assume interest is calculated on beginning balances. a) 163.2 b) 194.4 c) 247.1 d) 333.6 *Answer is 163.2 - please provide explanation

FINANCIAL ACCOUNTING

10th Edition

ISBN:9781259964947

Author:Libby

Publisher:Libby

Chapter1: Financial Statements And Business Decisions

Section: Chapter Questions

Problem 1Q

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Question

Calculate total amount of term A repaid in year 1 post deal using assumptions below.

Assume there are no mandated repayments, and all available cash flows can be used for debt repayment.

Assume cash taxes paid is after allowing for the tax shield on interest payments.

Assume interest is calculated on beginning balances.

a) 163.2

b) 194.4

c) 247.1

d) 333.6

*Answer is 163.2 - please provide explanation

Term A beginning balance 909.3
Interest rate on term A
5.8%
Term B beginning balance 479.7
Interest rate on term B
6.5%
Cash flow statement
ЕBITDA
332.3
Сарех
27.9
Increase in OWC
14.6
Cash taxes paid
42.7

Definition Definition Net amount of cash that an entity receives and expends over the course of a given period. For a business to continue operating, positive cash flows are required, and they are also necessary to produce value for investors. Investors in particular prefer to see growing cash flows even after capital expenditures have been paid for (which is known as free cash flow).

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