Question
It's a mutiple choice question, and the answer is C, I'm still confused about it. Could you please help me to solve this? In 2020,
It's a mutiple choice question, and the answer is C, I'm still confused about it. Could you please help me to solve this? In 2020, a firm had after-tax operating income [EBIT(1-t)] of $ 200 million; it had a book value of equity of $ 730 million and book value of debt of $ 210 million. Assume that you expect after- tax operating income to grow 10% in 2021, and no change in the firms after-tax return on capital. Estimate the free cash flow to the firm in 2021 based on given information. Hint: Expected Growth = Reinvestment Rate * ROC A. $ 155.1 million B. $ 135.4 million C. $ 115.3 million D. $ 103.1 million
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