Volunteer Enterprises has the following information for the current year. Calculate its free cash flow to equity. $\begin{array}{lr}
\text { FCF } & 1,000 \
\text { Interest expense } & 40 \
\text { Principal payments } & 200 \
\text { New debt } & 300 \
\text { Tax rate } & 25 \%
\end{array}$

Question

Quizplus · Accepted Answer

$\begin{array}{lr}
\text { FCF } & 1,000 & \
\text { Less after-tax interest } &  \
\text { expense } & 30 \quad \text { Interest expense } x(1-T)  \
\text { Less principal payments } &200\
\text { Plus new debt } & \underline{300} \
=\mathrm{FCFE}&  1,070
\end{array}$

Volunteer Enterprises Has the Following Information for the Current Year