Answer:
b. $4,213
Explanation:
Net Operating Profit = Sales - Operating costs - Depreciation Expenses
Net Operating Profit = $172,500 - $140,500 - $9,250
Net Operating Profit = $22,750
Free Cash Flow (FCF) = Net Operating Profit After Tax(NOPAT) – Capital Expenditures – Changes in Net Working Capital
Free Cash Flow (FCF) = Net operating income*(1 - Tax Rate) + Depreciation Expenses - Capital Expenditures - Changes in Net Working Capital
Free Cash Flow (FCF) = $22,750
*(1 - 0.25) + $9,250 - $15,250 - $6,850
Free Cash Flow (FCF) = $22,750
*0.75) + $9,250 - $15,250 - $6,850
Free Cash Flow (FCF) = $17,063 + $9,250 - $15,250 - $6,850
Free Cash Flow (FCF) = $4,213.
