Final answer:
Holmes, Inc.'s free cash flow is calculated by subtracting capital expenditures and stock repurchases from the net cash flow from operating activities. With operating cash flow at $160,000, equipment purchases of $83,000, and stock repurchases of $24,000, the free cash flow amounts to $53,000.
Step-by-step explanation:
To calculate Holmes, Inc.'s free cash flow, we need to consider the net cash flow from operating activities and then subtract any capital expenditures such as purchases of equipment and repurchases of stock. According to the information provided, Holmes, Inc. expects net cash flow from operating activities to be $160,000. The company also plans to make purchases of equipment totaling $83,000 and repurchases of stock amounting to $24,000.
The formula to calculate free cash flow is:
Free Cash Flow = Net Cash Flow from Operating Activities - Capital Expenditures
By substituting the provided figures into this formula, we get:
Free Cash Flow = $160,000 - ($83,000 + $24,000)
Free Cash Flow = $160,000 - $107,000
Free Cash Flow = $53,000
Therefore, the correct answer is A. $53,000.