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1. A firm has interest expense for the year of $400 and cash flow to creditors of negative $250 (CFC -$250). The firm paid of
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Answer #1

Cash flow to creditors = Interest paid – Net new borrowing

-250 = 400-(New borrowing-100)

-250 = 400-New borrowing+100

New borrowing = 250

Hence, borrowing over the year was $250

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