QUESTION 20

Given are the following data for year 1: Revenue = $45 million; Variable cost = $10 million; Fixed cost = $5 million; Depreciation = $1 million; Interest expense = $3 million; capital Investment = $12 million; change in working capital = $2 million. Corporate tax rate is 30%. Calculate the free cash flow to firm (FCFF) for year 1:

A. $4.2 million.

B. $6.3 million.

C. $5.2 million.

D. $7.3 million.