Use the following information to answer the question(s) below:
-The free cash flow to equity in 2010 is closest to:
A) 6,255
B) 10,684
C) 11,559
D) 18,394
E) 19,269

Question

Use the following information to answer the question(s) below:  
-The free cash flow to equity in 2010 is closest to:
A) 6,255 
B) 10,684 
C) 11,559 
D) 18,394 
E) 19,269

Quizplus · Accepted Answer

A) After-Tax interest expense = interest expense(1 - T_c) = 8,160(1 - .35) = 5,304 Note T_c = income tax / pre-tax income = 5,678/16,223 = 35% FCF_firm = NI + after tax interest + Depreciation - ΔNWC - capital expenditures FCF_firm = 10,545 + 5,304 + 15,848 - 7,710 - 8,000 = 11,559 FCF_equity = FCF_firm + Net borrowing - after tax interest expense FCF_equity =11,559 + 0 - 5,304 = 6,255

Use the Following Information to Answer the Question(s) Below