Given Are the Following Data for Year 1

question 27

Multiple Choice

Given are the following data for year 1:
Profits after taxes = $20 million; Depreciation = $6 million; Interest expense = $4 million; Investment in fixed assets = $12 million; Investment in working capital = $4 million. The corporate tax rate is 25 percent. Calculate the free cash flow (FCF) for year 1.

• A)$4 million
• B)$6 million
• C)$8 million
• D)$13 million

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Definitions:

Cash Flows From Operations

The amount of cash generated by a company’s normal business operations.