Question

7. Vasudevan Inc. recently reported operating income of $4.80 million, depreciation of $1.20 illion, and had a tax rate of 40%. The firms expenditures on fixed assets and net operating orking capital totaled $0.6 million. How much was its free cash flow, in millions? a. $3.17 b. $2.68 c. $3.48 d. $3.38 e. $4.28
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Answer #1

Free cash flows = Operating Profit - Tax + Depreciation - Expenditures on fixed assets and net working capital

= 4.80-(4.80*40%) + 1.20 - 0.6

= 3.48 million

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