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Houston Pumps recently reported $185,250 of sales, $140,500 of operating costs other than depreciation, and $9,200 of depreciation. Its federal-plus-state income tax rate was 20%.
Houston Pumps recently reported $185,250 of sales, $140,500 of operating costs other than depreciation, and $9,200 of depreciation. Its federal-plus-state income tax rate was 20%. In order to sustain its operations and thus generate future sales and cash flows, the firm was required to spend $15,250 to buy new fixed assets and to invest $6,800 in net operating working capital. What was the firm's free cash flow? (Hint: EBIT=Sales - Operating costs - Depreciation)?
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