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How much free cash flow did wells generate

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Problem 1: 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 6.75% interest rate, and its federal-plus-state income tax rate was 35%. 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?

Option 1: $1,770.00

Option 2: $1,858.50

Option 3: $1,951.43

Option 4: $2,049.00

Option 5: $2,151.45

Reference no: EM132837287

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