Computation of free cash flow

Reference no: EM139784

Computation of Free cash flow.

Beckham Broadcasting Company (BBC) has operating income (EBIT) of $2,500,000. The company's depreciation expense is $500,000 and it has no amortization expense. The company is 100% equity financed. The company has a 40% tax rate, and its net investment in operating capital is $1,000,000.9What is BBC's free cash flow?

a) $0

b) $500,000

c) $900,000

d) $1,000,000

e) $1,500,000

Reference no: EM139784

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