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What is its free cash flow

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Reference no: EM132831776

Question - A firm has earnings before interest and taxes (EBIT) of 55 million, depreciation of 9 million, and a 40% tax rate.  Its net fixed assets increased by 13 million. It spends 16 million to increase current assets.  It expects its accounts payable to increase by 3 million, its accruals to increase by 5 million, and its notes payable to increase by 4 million.  The firms current liabilities consist of only accounts payable, accruals, and notes payable. What is its free cash flow (FCF)?

1) 16 million

2) 12 million

3) 21 million

4) 7 million

Reference no: EM132831776

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