Question

Grossman Lumber reported $102,000 net cash provided by its operating activities. If the company invests $4,000 in capital expenditures and distributes $8,000 in dividends, its free cash flow will be

A : $102,000.
B : $94,000.
C : $90,000.
D : $98,000.

Answer 1

(C) $90,000

Step-by-step explanation:

As per the question,

Given data are:

Net cash provided = $102,000

Capital expenditures = $4,000

Dividends = $8,000

Free cash flow can be calculated as:

Free cash flow =

Total cash provided by the company - ( Total expenditures + Dividends)

Therefore.

Free cash flow = $102,000 - ($4,000 + $8,000)

= $102,000 - $12,000

= $90,000

Hence, the required free cash flow = $90,000