Calculate a Firm's Free Cash Flow If It Has Net

question 58

Multiple Choice

Calculate a firm's free cash flow if it has net operating profit after taxes of $60,000, depreciation expense of $10,000, net fixed asset investment requirement of $40,000, a net current asset requirement of $30,000 and a tax rate of 30%.

• A) $0
• B) $30,000
• C) -$30,000
• D) $60,000

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Definitions:

Predetermined Period

A predetermined period refers to a specific span of time that has been set in advance for a particular purpose or event.

Income Bonds

Bonds that pay interest only when the issuer has earned sufficient profits.

Interest Expense

Interest expense refers to the cost incurred by an entity for borrowed funds over a period of time.

Semiannually

Semiannually implies an occurrence or calculation that happens twice a year, often used in the context of interest payments or reporting periods.