Use the Information for the Question(s) Below

question 70

Multiple Choice

Use the information for the question(s) below.
Fly by Night Aviation (FBNA) expects to have net income next year of $24 million and Free Cash Flow of $27 million. FBNA's marginal corporate tax rate is 40%.
-IF FBNA increases leverage so that its interest expense rises by $1 million,then the amount its Free Cash flow will change is closest to:

• A) -$600,000
• B) -$400,000
• C) $600,000
• D) $400,000