You have been asked to review the free cash flow to the firm computation made by an analyst for Stark Stores

Inc., a small publicly traded retail company.

Analyst'scomputation

Last year (in millions)

Notes

Revenue

$1,200.00

- Operating Expenses

$600.00

Includes $ 100 million in operating lease expens

each year for the next 5 years and a pre-tax cost

1

Fall 2012 Name:

Operating Income

$600.00

- Interest Expenses

$150.00

Taxable Income

$450.00

- Taxes

$157.50

Paid marginal tax rate on taxable income

Net Income

$292.50

+ Depreciation

$100.00

- Cap Ex

$200.00

Did not include stock based acquisition of $50 m

- Increase in Working Capital

$50.00

Includes an increase in the cash balance of $ 10

Free cash flow to firm

$142.50

Estimate the correct free cash flow to the firm.