Tribal Networks recently reported $12,100 of sales, $7,500 of operating costs other than depreciation, and $800 of depreciation. The company had no amortization charges. It had $4,000 of outstanding bonds that carry a 7% interest rate, and its federal-plus-state income tax rate was 25%. In order to sustain its operations and thus generate sales and cash flows in the future, the firm was required to spend $400 to buy new fixed assets and to invest $900 in net operating working capital. How much free cash flow did the company generate?

Tribal Networks recently reported $12,100 of sales, $7,500 of operating costs other than depreciation, and $800 of depreciation. The company had no amortization charges. It had $4,000 of outstanding bonds that carry a 7% interest rate, and its federal-plus-state income tax rate was 25%. In order to sustain its operations and thus generate sales and cash flows in the future, the firm was required to spend $400 to buy new fixed assets and to invest $900 in net operating working capital. How much free cash flow did the company generate?

EBK CONTEMPORARY FINANCIAL MANAGEMENT

14th Edition

ISBN:9781337514835

Author:MOYER

Publisher:MOYER

Chapter9: Capital Budgeting And Cash Flow Analysis

Section: Chapter Questions

Problem 1P

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