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In: Finance
Watson Oil recently reported (in millions) $8,250 of sales, $5,750 of operating costs other than depreciation,...
Watson Oil recently reported (in millions) $8,250 of sales, $5,750 of operating costs other than depreciation, and $800 of depreciation. The company had $3,200 of outstanding bonds that carry a 5% interest rate, and its federal-plus-state income tax rate was 35%. In order to sustain its operations and thus generate future sales and cash flows, the firm was required to make $1,250 of capital expenditures on new fixed assets and to invest $300 in net operating working capital. By how much did the firm's net income exceed its free cash flow? Do not round the intermediate calculations.
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Expert Solution
Free Cash flow means the excess of post tax operating income over the net investment. we have considered the effect of depreciation in the computing free cash flow.
Detailed answer is here as under :
jeff jeffy answered 2 years agoRelated Solutions
Watson Oil recently reported (in millions) $8,250 of sales, $5,750 of operating costs other than depreciation,...
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