Question #77
Reading: Reading 21 Free Cash Flow Valuation
PDF File: Reading 21 Free Cash Flow Valuation.pdf
Page: 37
Status: Unattempted
Question
The following information pertains to the Harrisburg Tire Company (HT
Answer Choices:
A. $300M
B. $420M
C. $540M
Explanation
The free cash flow to the firm is:
FCFF = Net income + (Interest expense)(1 − T) − Capital expenditures +
Depreciation
600M + 400M(1 − 0.40) − 800M + 500M = 540M