This year, FCF Inc. has earnings before interest and taxes of $9,630,000, depreciation expenses of $1,200,000, capital expenditures of $1,700,000, and has increased its net working capital by $600,000. If its tax rate is 35%, what is its free cash flow?
This year, FCF Inc. has earnings before interest and taxes of $9,630,000, depreciation expenses of $1,200,000, capital expenditures of $1,700,000, and has increased its net working capital by $600,000. If its tax rate is 35%, what is its free cash flow?
Essentials Of Investments
11th Edition
ISBN:9781260013924
Author:Bodie, Zvi, Kane, Alex, MARCUS, Alan J.
Publisher:Bodie, Zvi, Kane, Alex, MARCUS, Alan J.
Chapter1: Investments: Background And Issues
Section: Chapter Questions
Problem 1PS
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Question
This year, FCF Inc. has earnings before interest and taxes of
$9,630,000,
$1,200,000,
capital expenditures of
$1,700,000,
and has increased its net working capital by
$600,000.
If its tax rate is
35%,
what is its free cash flow?
Expert Solution
Step 1
Free cash flow is the cash available to the company after meeting its operating and capital expenditure requirement. This can be calculated using the Cash flow statements
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