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Hartzell Inc. had the following data for 2017, in millions: Net income = $600; after-tax operating...

Hartzell Inc. had the following data for 2017, in millions: Net income = $600; after-tax operating income [EBIT (1-T)] = $700; and Total assets = $2,000. Information for 2018 is as follows: Net income = $825; after-tax operating income [EBIT (1-T)] = $825; and Total assets = $2,500. Assume the firm had no excess cash. How much free cash flow did the firm generate during 2018?

a.

$325
b.

$367
c.

$257
d.

$286
e.

$397

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Expert Solution

Free cash flow = EBIT(1 - t) - Increase in capital expenditure

Free cash flow = $825 - ($2,500 - $2,000)

Free cash flow = $325

jeff jeffy answered 2 years ago
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