Question
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
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 $2,950 of outstanding bonds that carry a 6.25% 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 $800 to buy new fixed assets and to invest $250 in net operating working capital. How much free cash flow did Dino Drilling generate?
a. $1,525.00
b. $575.00
c. $2,049.00
d. $2,750.00
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