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Problem:

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

a) $0

b) $500,000

c) $900,000

d) $1,000,000

e) $1,500,000

Basic Finance, Finance

  • Category:- Basic Finance
  • Reference No.:- M910700

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