Answer:
The free cash flow is $2,300
Explanation:
To compute the free cash flow, we have to apply the formula which is shown below:
= Earning before income and taxes × ( 1 - tax) + amortization & depreciation - capital expenditure - changes in working capital
where,
Earning before income and taxes = Sales - operating cost - depreciation
= $10,750 - $5,500 - $1,250
= $4,000
And other values remain same
Now put these values to the above formula
So, the answer would be equal to
= $4,000 × (1 - 40%) + $1,250 - $1,350
= $2,300
