Respuesta :
Answer:
Free Cash Flow  =  $4,213
Explanation:
As per the data given in the question,
Firm's free cash flow :
Tax rate = 25%
Net working capital =$6,850
Capital expenses = $15,250
Sales = $172,500
Operating costs other than depreciation = $140,500
Depreciation = $9,250
Operating income = $22,750
Now,
Operating income after tax  ($22,750×75%)         $17,063
Add: Depreciation                             $9,250
Less: Capital expenditure                        $15,250
Less: Working capital                           $6,850
Free Cash Flow                                $4,213
The firm's free cash flow is $4,213.
Given Information
Tax rate = 25%
Net working capital =$6,850
Capital expenses = $15,250
Sales = $172,500
Operating costs other than depreciation = $140,500
Depreciation = $9,250
Operating income = $22,750
Particulars                                   Amount
Operating income after tax  ($22,750×75%)        $17,063
Add: Depreciation                             $9,250
Less: Capital expenditure                       $15,250
Less: Working capital                           $6,850
Free Cash Flow                               $4,213
In conclusion, the firm's free cash flow is $4,213
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