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Marianna [84]
3 years ago
5

Vasudevan Inc. recently reported operating income of $2.90 million, depreciation of $1.20 million, and had a tax rate of 40%. Th

e firm's expenditures on fixed assets and net operating working capital totaled $0.6 million. How much was its free cash flow, in millions?
Business
1 answer:
babymother [125]3 years ago
4 0

Answer:

2.34 million

Explanation:

Vasudevan incorporation reported an operating income of $2.90 million

The depreciation is $1.20 million

The tax rate is 40%

= 40/100

= 0.4

The firm's expenditure on fixed assets and net operating working capital is $0.6 million

Therefore, the free cash flow can be calculated as follows

Free cash flow= operating profit-tax+depreciation-expenditure

= 2.90-(2.90×0.4)+1.20-0.6

= 2.90-1.16+1.20-0.6

= 2.34

Hence the free cash flow is 2.34 million

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