XYZ Has Excess Cash of $600,000 and Earns 3% on Excess

question 7

Multiple Choice

XYZ has excess cash of $600,000 and earns 3% on excess cash.The firm plans to pay back $500,000 of debt this year,after paying the full annual interest on its debt.If XYZ has a corporate tax rate of 40%,what is the free cash flow to the firm?

• A)$550,000
• B)$1.55 million
• C)$1 million
• D)$1.1 million
• E)$1.05 million

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