Question

Tropetech Inc. has an expected net operating profit after taxes, EBIT(1 – T), of $16,300 million in the coming year. In addition, the firm is expected to have net capital expenditures of $2,445 million, and net operating working capital (NOWC) is expected to increase by $50 million. How much free cash flow (FCF) is Tropetech Inc. expected to generate over the next year?

Answer 1

$13,805 million

Step-by-step explanation:

The computation of the free cash flow is shown below:

= EBIT (1 - T) - net capital expenditure - change in net operating working capital

= $16,300 million - $2,445 million - $50 million

= $13,805 million

Simply we deduct the net capital expenditure and the change in net operating working capital from the EBIT (1- T) so that the true value can come.