Lamm Corporation is expected have EBIT of $6.2M this year. Lamm Corporation is in the 40% tax bracket, will report $1.2M in depreciation, will make $1.4M in capital expenditures, and will have a $160,000 increase in net working capital this year. What is Lamm's FCFF?
A. 6,200,000
B. 6,160,000
C. 3,360,000
D. 3,680,000
E. 4,625,000
C. 3,360,000
FCFF = EBIT(1-T) + depreciation capital expenditures increase in NWC or 6,200,000(.6) + 1,200,000 1,400,000 160,000 = 3,360,000.
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