Chemex has a cash and marketable securities balance of $200 million. Management expects free cash flows of $320 million during the coming year. If management is considering a restructuring of its capital structure that would add an additional $350 million of annual fixed financial charges, what is the expected cash balance at the end of the year?
A) -$30 million
B) $170 million
C) $230 million
D) $470 million

Question

Quizplus · Accepted Answer

The expected cash balance at the end of the year can be calculated by adding the initial cash and marketable securities balance ($200 million) to the expected free cash flows ($320 million) and then subtracting the additional annual fixed financial charges ($350 million). This results in $200 million + $320 million - $350 million = $170 million.

Chemex Has a Cash and Marketable Securities Balance of $200