Question

Use the following information to compute the free cash flow (FCF) for DuPont Ltd.

• Sales = $10,000,000
• Cost of goods sold = $7,000,000
• Depreciation = $1,300,000
• Interest paid = $350,000
• Taxation rate = 30%
• Fixed (or long term or non-current) assets this year = $30,000,000
• Fixed (or long term or non-current) assets last year = $29,000,000
• Change in net working capital = $100,000

Select one:

a. $2,400,000

b. $90,000

c. $1,332,009

d. $560,000

e. $195,000

Answer 1

Calculation of Free Cash Flow |EBIT Less:Tax@30% $1,700,000 $510,000 $1,190,000 1,300,000 2490000 Add: Depreciation $100,000 Less: Change in working capital Less: Capital expenditure Free Cash Flow $1,000,000 $1,390,000 Working note: EBIT Sales - Cost of good Sold-Depreciation $10,000,000 - $7,000,000-$1,300,000 $1,700,000