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
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