Fly Boy Corporation is expected have EBIT of $800k this year.Fly Boy Corporation is in the 30% tax bracket,will report $52,000 in depreciation,will make $86,000 in capital expenditures,and have a $16,000 increase in net working capital this year.What is Fly Boy's FCFF?
A)510,000
B)406,000
C)542,000
D)596,000
E)682,000

Question

Quizplus · Accepted Answer

FCFF = EBIT * (1 - Tax Rate) + Depreciation - Capital Expenditures - Increase in Net Working Capital= $800,000 * (1 - 0.30) + $52,000 - $86,000 - $16,000= $560,000 + $52,000 - $86,000 - $16,000= $510,000

Fly Boy Corporation Is Expected Have EBIT of $800k This