Question

Based on the following data, what is the free cash flow for year 1? Year 1...

Based on the following data, what is the free cash flow for year 1?

Year

1

Revenue

665.00

Fixed costs

80.00

Variable costs

250.00

Additional investment in NWC

15.00

Additional investment in operating long-term assets

90.00

Depreciation

75.00

Tax rate

0.40

Select one:

a. $137

b. $103

c. $121

d. $126

e. $116

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Homework Answers

Answer #1
Additional investment in long term assets $   -90.00
Add: Additional Investment in Net Working Capital $   -15.00
Revenue $ 665.00
Less: Variable Cost $ 250.00
Contribution Margin $ 415.00
Less: fixed Cost $    80.00
Less: Depreciation $    75.00
Net Income before Tax $ 260.00
Less: Tax@40% $ 104.00
Net Income after tax $ 156.00
Add: Depreciation $    75.00
Cash flow for year 1(-90-15+156+75) $ 126.00
Ans (d) $126
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