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Washington Enterprises had net income of $1,000,000, invested $150,000 in fixed assets, paid $50,000 in dividends,...

Washington Enterprises had net income of $1,000,000, invested $150,000 in fixed assets, paid $50,000 in dividends, and took depreciation expense of $80,000? Free cash flow was

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Answer #1

Free cash flow = Net income + Depreciation - fixed capital
Free cash flow = 1000000 + 80000 - 150000
Free cash flow = 930000
Free cash flow is the cash left after all opertaing expenses and CAPEX.
Note - Shareholers transactions like issue of shares, repurchase of shares, payment of dividend does not effectt free cash flow.

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