Final answer:
Simon Corporation's free cash flow is calculated by subtracting capital expenditures from the net cash provided by operating activities, which equals $658,000 for the year 2021.
Step-by-step explanation:
To calculate Simon Corporation's free cash flow, we first need to understand what free cash flow represents. It's the cash that a company is able to generate after laying out the money required to maintain or expand its asset base. In other words, free cash flow is the cash remaining after a company pays for its capital expenditures and operating expenses.
To calculate the free cash flow for Simon Corporation, we follow this formula:
Free Cash Flow = Net Cash Provided by Operating Activities - Capital Expenditures
The net cash provided by operating activities for Simon Corporation is $750,000. To find the capital expenditures, we sum the amounts spent on the purchase of land ($38,000), purchase of equipment ($54,000), and the purchase of property, plant, and equipment, if there were any, which in this case would be part of the sale of land and building transaction, but we only include the expenditures, not the sale. Therefore, capital expenditures sum to $92,000.
Using the formula:
Free Cash Flow = $750,000 - $92,000
Simon Corporation's free cash flow for the year 2021 would be $658,000.