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Calculate the free cash flow for year one

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Reference no: EM132635977

Given are the following data for year 1:

Profits after taxes = $14 million;
Depreciation = $6 million;
Interest expense = $6 million;
Investment in fixed assets = $12 million;
Investment in working capital = $3 million.
The corporate tax rate is 25 percent.

Problem 1: Calculate the free cash flow (FCF) for year 1.

Option 1: $4.5 million

Option 2: $6.0 million

Option 3: $7.0 million

Option 4: $9.5 million

Reference no: EM132635977

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