Question 25 (3 points)

Cremona is a manufacturer of cellos. It earned an after-tax return on capital of 10 percent last year and expects to maintain this next year. If the current year's after-tax operating income is $100 million and the firm reinvests 60 percent of this income back, estimate the FCFF next year.

Question 25 options:

$100 million

$49.2 million

$54.3 million

$42.4 million