Dino Drilling recently reported $$7,950$ of sales, $$4,500$ of operating costs other than depreciation, and $$950$ of depreciation.

The company had no amortization charges, it had $$3,000$ of outstanding bonds that carry a $6\mathrm{.}25\%$ interest rate, and its

combined federal and provincial income tax rate was $35\%.$ In order to sustain its operations and thus generate sales and

cash flows in the future, the firm was required to spend $$850$ to buy new fixed assets and to invest $$300$ in net operating

working capital. How much free cash flow did Dino Drilling generate?

Hint:

Free Cash Flow $($FCF$)=$ Net Operating Profit After Tax $($NOPAT$)-$ Net Investment in Operating Capital

or

Free Cash Flow $($FCF$)=$ EBIT x $(1-$ Tax Rate$($T$))-$ Net Investment in Operating Capital

or

Free Cash Flow $($FCF$)=($Sales $-$ Operating costs excluding depreciation $-$ Depreciation$)-$ x $(1-$ T$)-($Required

addition to net operating working $+$ Required capital expenditures $($fixed assets$))$

a$.$ $$1,849\mathrm{.}00$

b$.$ $$475\mathrm{.}00$

c$.$ $$475\mathrm{.}00$

d$.$ $$2,750\mathrm{.}00$