Question

Gadget Twin Inc. has an expected net operating profit after taxes, EBIT(I-T), 12,600 million in the coming year. In addition, the firm is expected to have net capital expenditures of $1,890 million, and net operating working capital (NOWC) is expected to increase by $40 million. How much free cash flow (FCF) is Gadget Twin Inc. expected to generate over the next year? A. $514,450 million B. $255,201 million C. $10,670 million D. $10.750 million

Answer 1

$10,670 million

Step-by-step explanation:

The computation of the free cash flow is shown below:

= EBIT × (1 -Tax Rate) + Depreciation & Amortization - Change in Net operating Working Capital - net capital Expenditure.

= $12,600 million - $0 - $1,890 million - $40 million

= $10,670 million

We simply deduct the increase in net operating capital and the net capital expenditure from the EBIT after tax so that the accurate amount can come

All other information which is given is not relevant. Hence, ignored it