Lamm Corporation Is Expected Have EBIT of $6

question 73

Multiple Choice

Lamm Corporation is expected have EBIT of $6.2M this year. Lamm Corporation is in the 40% tax bracket, will report $1.2M in depreciation, will make $1.4M in capital expenditures, and will have a $160,000 increase in net working capital this year. What is Lamm's FCFF?

• A) 6,200,000
• B) 6,160,000
• C) 3,360,000
• D) 3,680,000
• E) 4,625,000

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Definitions:

Discount Factors

A multiplicative factor used to discount future cash flows back to their present value.

Present Value

The present-day assessment of a future sum of money or cash flow series, after considering a specified rate of return.

Cash Flows

The net amount of cash being transferred into and out of a business.

Compounded Monthly

Compounded monthly refers to the process of calculating interest on an investment or loan by adding the interest earned to the principal, so that each subsequent interest calculation is made on a larger base.