Question

Valdez Building Products, Inc., reports that last year it had unlevered net income of $4.1 million, depreciation expenses of $2.4 million, capital expenditures of $2.0 million, and Net Working Capital decreased by $1.1 million. What was the firm's free cash flow last year?
A) $2.4 million.
B) $6.5 million.
C) $8.1 million.
D) $11.1 million.

Answer 1

Answer: $5,600,000

Explanation:

The firm's free cash flow last year will be:

Net Income = $4,100,000.00

Add: Depreciation = $2,400,000.00

Less: Capital Expenditure = $2,000,000.00

Add: Decrease in Net working capital = $1,100,000

Free Cash Flow = $5,600,000