A Free Practice Test for All CFA Level II Readers

Hello,

I just took your L2 mock and am going through the debriefing. I was wondering if you could tell me where the 2,973 number for FCinv comes from? As far as I knew FCinv = Any additions for the year, and I’m getting the additions as follows:

Opening PPE: 9,975
Additions: 3,038
Disposal: (65)
Depreciation: (872)
Ending PPE: 12,076

Your Answer:
Computing FCFF from net income
Net income 1,975
plus interest expense, after tax 356 532 * (1 – 0.33)
Depreciation and amortization 872
Net additions to property, plant, and equipment (2,973)
(Increase) decrease in working capital (413) from CFS
Increase (decrease) in deferred tax liability 26
FCFF (157)

Thanks!!

It’s also by subtracting the Disposals from the Additions: 3,038 – 65 = 2,973

Based on the values provided = Ending PPE – Beginning PPE + Depreciation
= 12076-9975 + 872
= 2973