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Washington Enterprises had net income of​ $1,000,000, invested​ $150,000 in fixed​ assets, paid​ $50,000 in​ dividends,...

Washington Enterprises had net income of​ $1,000,000, invested​ $150,000 in fixed​ assets, paid​ $50,000 in​ dividends, and took depreciation expense of​ $80,000? Free cash flow was

A.

​$770,000.

B.

​$720,000.

C.

​$1,230,000

D.

​$930,000.

E.

​$880,000.

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Answer #1

     

_______________________________

_______________________________

Free cash Flows = Operating cash flow after deducting the cap ex

Operating cash Flows = Net Income + add back Depriciation

= 1,000,000 + 80,000

= 1,080,000

Free Cash Flows = 1,080,000 - 150,000

= 930,000

***Dividends are distributed out of the Free cash Flows***

Option D is correct.

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