Provo's free cash flow for 2008 is $2,600,000
               <u>Income Statement</u>
Revenue                        $10,000,000
Operating expenses   - $5,000,000
Depreciation               -  <u>$1,000,000</u>
EBIT                                $4,000,000
Interest expenses        - $0
Taxes                            - <u>$1,600,000</u>    (40% * $4,000,000)
Net Income                     $2,400,000
Depreciation                  +<u>$1,000,000</u>
Operating cash flow      <u>$3,400,000</u>
Free cash flow = Operating Cash flow - Purchase of equipment - Increase in Inventory
Free cash flow = $3,400,000 - $500,000 - $300,000
Free cash flow = $2,600,000
See related question on this here<em> brainly.com/question/10705084</em>