Question

g What's the FCFF of a company with total revenues of $814 million, operating profit margin of 36%, tax rate of 29% and reinvestment rate of 46%

Answer 1

$208.0584 million

Step-by-step explanation:

Total revenue = $814 million

Operating profit margin is 36%

Tax rate is 29%

Reinvestment rate is 46%

Therefore the FCFF can be calculated as follows

= $814 million × 36/100 × (1-29/100)

= $814 million × 0.36 ×(1-0.29)

= $814 million × 0.36 × 0.71

= $208.0584 million

Hence the FCFF is $208.0584 million