Wells Water Systems recently reported $$8,250$ of sales, $$4,500$ of operating costs other than depreciation, and $$950$ of depreciation. The company had no amortization charges, it had $$3,250$ of outstanding bonds that carry a $6\mathrm{.}75\%$ 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 $$750$ to buy new fixed assets and to invest $$250$ in net operating working capital. How much free cash flow did Wells generate?

Question $3$Answer

a$.$

$$2,491\mathrm{.}79$

b$.$

$$2,152\mathrm{.}50$

c$.$

$$2,050\mathrm{.}00$

d$.$

$$2,373\mathrm{.}13$

e$.$

$$2,260\mathrm{.}13$invest $$250$ in net operating working capital. How much free cash flow did Wells generate?

a$.$ $$2,491\mathrm{.}79$

b$.$ $$2,152\mathrm{.}50$

c$.$ $$2,050\mathrm{.}00$

d$.$ $$2,373\mathrm{.}13$

e$.$ $$2,260\mathrm{.}13$