Lauryn’s Doll Co. had EBIT last year of $49 million, which is net of a depreciat

Question

Lauryn’s Doll Co. had EBIT last year of $49 million, which is net of a depreciation expense of $4.9 million. In addition, Lauryn made $4.50 million in capital expenditures and increased net working capital by $2.2 million. Assume that Lauryn has a reported equity beta of 1.7, a debt-to-equity ratio of .7, and a tax rate of 40 percent. What is Lauryn’s FCF for the year? (Do not round intermediate calculations. Enter your answer in millions rounded to 2 decimal places. Omit the "$" sign in your response.)

Explanation / Answer

SOLUTION FCF=EBIT(1-Tax Rate) + Depreciation & Amortization - Change in Net Working Capital - Capital Expenditure. 49(1-.600+4.9-2.2-4.5= 17.8 MILLION

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