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A firm has $16 million in net operating profit after taxes (NOPAT) in the current year....

A firm has $16 million in net operating profit after taxes (NOPAT) in the current year. It has $12 million in total net operating assets in the current year and had $10 million in the previous year. What is its free cash flow?

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Answer #1

Free cash flow = NOPAT - Investment in total net operating capital

Free cash flow = $16,000,000 - ($12,000,000 - $10,000,000)

Free cash flow = $16,000,000 - $2,000,000

Free cash flow = $14,000,000

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