During 2006, NICO Corporation had EBIT of $100,000, a change in net fixed assets of $400,000, an increase in net current assets of $100,000, an increase in spontaneous current liabilities of $400,000, a depreciation expense of $50,000, and a tax rate of 30 percent. Based on this information, NICO’s free cash flow is
A. –$630,000.
B. –$50,000.
C. $650,000.
D. –$30,000.
Answer:D
During 2006, NICO Corporation had EBIT of $100,000, a change in net fixed assets of $400,000, an increase in net current assets of $100,000, an increase in spontaneous current liabilities of $400,000, a depreciation expense of $50,000, and a tax rate of 30 percent. Based on this information, NICO’s free cash flow is
A. –$630,000. B. –$50,000. C. $650,000. D. –$30,000.