Houston Pumps recently reported $222,500 of sales, $121,000 of operating costs other than depreciation, and $11,500 of depreciation. The company had $35,250 of outstanding bonds that carry a 6.75% interest rate, and its federal-plus-state income tax rate was 25%. In order to sustain its operations and thus generate future sales and cash flows, the firm was required to spend $15,250 to buy new fixed assets and to invest $5,600 in net operating working capital. What was the firm's free cash flow?

a. $58,150.00

b. $73,400.00

c. $69,150.00

d. $63,750.00

e. $80,650.00

Answer rating: 100% (QA)

1 Sales 2 Less 3 Operating expenses 4 Depreciation 5 Earning before i... View the full answer