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1-Your company’s revenues were $2 million this year. You paid out $500,000 in salaries and your...

1-Your company’s revenues were $2 million this year. You paid out $500,000 in salaries and your only other cash outflow was the purchase of a piece of construction equipment for $1 million that is to be depreciated to a zero salvage value on a straight-line basis over the next 10 years. If your tax rate is 21%, what was your free cash flow

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Answer #1

Free cash flow = cash flow from operating activities - capital expenditure

= (2000000 - 500000)*(1-0.21) - 1000000

= $185000

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