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Question 1) CorleoneConstruction Company reports EBIT of $350,000, current taxes of $50,000, and depreciation expense of $25,000. Total current assets for the current year are $75,000 and for the prior year are $70,000. Total current liabilities for the current year are $25,000 and for the prior year are $20,000. The company also invested $175,000 in long-term assets during the year. What isCorleone’scash flow to investors (CFI)? 2) Suppose an executive has been granted 1,000 stock options (the right to buy at the strike price) with a strike price equal to the current stock price of $3.00 per share. What is the manager’s payoff if these options are exercised when the stock price is $3.75 per share?

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Question

1) CorleoneConstruction Company reports EBIT of $350,000, current taxes of $50,000, and depreciation expense of

$25,000.  Total current assets for the current year are $75,000 and for the prior year are $70,000.  Total current liabilities for the current year are $25,000 and for the prior year are $20,000.  The company also invested $175,000 in long-term assets during the year.  What isCorleone’scash flow to investors (CFI)?

2) Suppose an executive has been granted 1,000 stock options (the right to buy at the strike price) with a strike price equal to the current stock price of $3.00 per share.  What is the manager’s payoff if these options are exercised when the stock price is $3.75 per share?

 
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