What is the amount of net borrowing for the Austin Company

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Question - Consider the next situations:

1. Consider the Austin Company, which has a free cash flow to equity of $100 million, and free cash flow to the firm of $125 million. If the Austin Company had interest after tax of $10 million, what is the amount of net borrowing for the Austin Company for this period?

2. Suppose the cash flow from operations of the Knoxville Company is $200 million and the company had capital expenditures of $50 million during this period. If Knoxville has no debt in its capital structure, what is its cash flow to the firm? What is its cash flow to equity?

Reference no: EM132979033

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