Question: Applying the Treasurers Rule (Medium) a. A firm generated free cash flow of $2,348 million and paid net interest of $23 million after tax. It

Applying the Treasurer’s Rule (Medium)

a. A firm generated free cash flow of $2,348 million and paid net interest of $23 million after tax. It paid a dividend of $14 million and issued shares for $54 million. There were no share repurchases. What did the treasurer do with the remaining cash flow and for how much?

b. A firm generated a negative free cash flow of $1,857 million, but the board of directors, understanding that the firm was quite profitable, maintained the dividend of $1.25 per share on the 840 million shares outstanding. The firm also paid $32 million in net interest (after tax). What are the responses open to the treasurer?

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