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Problem 2-34 Free Cash Flow (LG-5) The 2021 income statement for Egyptian Noise Blasters shows that...

Problem 2-34 Free Cash Flow (LG-5) The 2021 income statement for Egyptian Noise Blasters shows that depreciation expense is $85 million, NOPAT is $254 million. At the end of the year, the balance of gross fixed assets was $675 million. The change in net operating working capital during the year was $75 million. Egyptian’s free cash flow for the year was $205 million. Calculate the beginning-of-year balance for gross fixed assets. (Enter your answer in millions of dollars.)

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Answer #1

Formula for Free Cash flow of firm(FCFF):-

FCFF = NOPAT + Depreciation - Change in net opearting working capital - Net Capital Expenditure

$205 million = $254 million + $85 million - $75 million - Net Capital Expenditure

Net Capital Expenditure = $59 million

- Net Capital Expenditure = Gross Fixed assets end of the year - Gross Fixed assets beginning of the year

$59 million = $675 million - Gross Fixed assets beginning of the year

Gross Fixed assets beginning of the year = $616 million

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