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1 answer:
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Answer:
free cash flow is $31167.35
Step-by-step explanation:
given data
net income = $42,500
depreciation expense = $1,800
interest expense = $900
taxes = $1,600
net working capital = $2,300
to find out
What is the amount of the free cash flow
solution
we know that FCF free cash flow formula that is
FCF = Net income + depreciation - net working capital - capital expenditures + interest expense × ( 1 - tax rate) ........................1
here tax rate is calculate as
tax rate = tax paid ÷ (net income + taxes paid)
so here from equation 1 we get FCF
free cash flow =42,500 + 1,800 - 2,300 - 11,700 + 900 × (1 - )
free cash flow = 31167.35
so free cash flow is $31167.35