Question

Tropetech Inc. has an expected net operating profit after taxes, EBIT(1 – T), of $16,300 million in the coming year. In addition, the firm is expected to have net capital expenditures of $2,445 million, and net operating working capital (NOWC) is expected to increase by $50 million. How much free cash flow (FCF) is Tropetech Inc. expected to generate over the next year? $13,805 million $331,476 million $18,695 million $13,905 million

Answer 1

Answer:

$13,805 million

Explanation:

The calculation of free cash flow is computed by applying the following formula

Free cash flow = EBIT(1 - t) - Net Capital Expenditure - Net operating working capital

where,

EBIT(1 - t) is $16,300 million

Net capital expenditure is $2,445 million

And, the net operating working capital is $50 million

Now putting the items values to the formula

So, the free cash flow is

= $16,300 million - $2,445 million - $50 million

= $13,805 million

Basically we applied the above formula to find out the free cash flow