Ref 11-2 Champagne, Inc., Had Revenues of $12 Million, Cash Operating Expenses

question 38

Multiple Choice

Ref 11-2
Champagne, Inc., had revenues of $12 million, cash operating expenses of $8 million, and depreciation and amortization of $1.5 million during 2008. The firm purchased $700,000 of equipment during the year while increasing its inventory by $500,000 (with no corresponding increase in current liabilities) . The marginal tax rate for Champagne is 30 percent.
-Free cash flow: What is Champagne's cash flow from operations for 2008?

• A) $2,050,000
• B) $2,500,000
• C) $3,250,000
• D) $4,000,000