Company actual after-corporate-tax free cash flow

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Reference no: EM132000793

Eroneous company has total assets of $100,000 and earnings before interest and taxes of $10,000. The company is 40% debt financed and 60% equity financed. The interest rate on the company’s debt is 6% and the corporate tax rate is 25%. Based on this information, what is the company’s actual after-corporate-tax free cash flow for all investors and what would the after-tax cash flow be if the company had no debt financing?

Reference no: EM132000793

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