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You have been asked to review the free cash flow to the firm computation made by an analyst for Stark Stores Inc., a small publicly

You have been asked to review the free cash flow to the firm computation made by an analyst for Stark Stores Inc., a small publicly traded retail company. Estimate the correct Free Cash Flow to the Firm.

Analyst Estimate

Last Year (in millions) Notes
Revenue $1,200.00
-Operating Expenses $600.00

Includes $100 million in operating lease expenses.

The firm has $80 million in lease commitments each

year for the next 5 years an a pre-tax cost of debt of 5%.

Operating Income $600.00
-Interest Expense $150.00
Taxable Income $450.00
-Taxes $157.50 Paid Marginal Tax Rate on taxable income.
Net Income $292.50
+Depreciation $100.00
-CAPEX $200.00 Did not include stock based acquisition of $50 million.
-Increase in WC $50.00 Includes increase in cash balance of $10 million.
FCFF $142.50

Input your answer in the same number format as the chart above (use 50 for 50 million).

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