Next year, Flying Cow is expected to earn an EBIT of
$10,000,000, and to pay a federal-plus-state tax rate of 35%. It
also expects to make $2,500,000 in new capital expenditures to
support this level of business activity, as well as $50,000 in
additional net operating working capital (NOWC).
Given these expectations, it is reasonable to conclude that next
year Flying Cow will generate an annual free cash flow (FCF)
of (rounded to the nearest whole
dollar).
Next, based on...