Question

Tropetech Inc. has an expected net operating profit after taxes, EBIT(1 – T), of $1,200 million in the coming year. In addition, the firm is expected to have net capital expenditures of $180 million, and net operating working capital (NOWC) is expected to increase by $15 million. How much free cash flow (FCF) is Tropetech Inc. expected to generate over the next year?

Answer 1

Answer:

$1,005 million

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.

= $1,200 million - $180 million - $15 million

= $1,005 million

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

Since the value of the depreciation and amortization is not given. So, we do not consider it