Sunshine Airlines recently reported $7,850,00 of sales, $3,350,000 of operating costs other than depreciation, and $1,125,000...

 

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Sunshine Airlines recently reported $7,850,00 of sales, $3,350,000 of operating costs other than depreciation, and $1,125,000 of depreciation. The company had $1,000,000 of outstanding bonds that carry a 7.25% interest rate, and its federal-plus-state income tax rate was 30%. In order to sustain its operations and thus generate future sales and cash flows, the firm was required to spend $1,250,000 to buy new fixed assets and to invest $225,000 in net operating working capital. What was the firm's free cash flow? Sunshine Airlines recently reported $7,850,00 of sales, $3,350,000 of operating costs other than depreciation, and $1,125,000 of depreciation. The company had $1,000,000 of outstanding bonds that carry a 7.25% interest rate, and its federal-plus-state income tax rate was 30%. In order to sustain its operations and thus generate future sales and cash flows, the firm was required to spend $1,250,000 to buy new fixed assets and to invest $225,000 in net operating working capital. What was the firm's free cash flow?

Answer rating: 100% (QA)

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