Calculate the Free Cash FLow to the Firm (FCFF) for Holt given the Cash Flow and Income Statement attached here
Download attached here
.

Question

Calculate the Free Cash FLow to the Firm (FCFF) for Holt given the Cash Flow and Income Statement attached here 
Download attached here
.

BlackTom AI · Accepted Answer

The task is to calculate the Free Cash Flow to the Firm (FCFF) for Holt using the attached Cash Flow and Income Statement.

However, there are no answer options provided in the prompt to compare against, so we cannot determine which choice "$308" corresponds to. Without the numeric data from the attachments (EBIT,税 rate, depreciation or amortization, capital expenditures, and changes in working capital), we can't confirm a specific FCFF value.

General approach to FCFF calculation (two common formulas):
- Formula A (EBIT-based): FCFF = EBIT × (1 − tax rate) + Depreciation & Amortization − Capex − ΔNWC
  - Here, EBIT is earnings before interest and taxes from the income statement; tax rate is the marginal rate affecting operating income; Depreciation & Amortization (D&A) comes from the income statement or cash flow statement; Capex is capital expenditures; ΔNWC is the change in net working capital (current assets minus current liabilities, excluding cash) from year to year.
- Formula B (CFO-based): FCFF = CFO − Capex + (Interest × (1 − tax rate))
  - This version starts from cash flow from operations (CFO) and adjusts for capital expenditures and the after-tax cost of debt financing. It’s less common when using EBIT-level data but valid when CFO is the starting point and the tax shield on interest is accounted for via (1 − tax rate).

What you would do with the attached data:
- Identify EBIT and the marginal tax rate from the income statement to compute EBIT × (1 − tax rate).
- Obtain D&A from either the income statement or the notes, and subtract Capex (capital expenditures) from the firm’s cash flows.
- Determine ΔNWC from the balance sheet or cash flow statement—specifically the change in working capital between the two periods.
- If using the CFO-based approach, take CFO from the cash flow statement and subtract Capex, then add back after-tax interest if relevant for FCFF as defined.

Since the numerical values are not present in the prompt (and no options are listed), I cannot produce a numeric FCFF value or verify if it equals $308. To proceed, you would:
- Open the attached cash flow and income statement documents, extract the required line items, and plug them into one of the formulas above.
- Ensure you’re using the FCFF definition expected by your coursework or quiz (some definitions emphasize EBIT-based FCFF, others CFO-based with after-tax interest adjustments).

If you can share the specific numbers or re-attach the data, I can walk through the calculation step by step and confirm whether the FCFF result matches the provided option.

MGT232H5 F LEC0101 Quiz 1

Calculate the Free Cash FLow to the Firm (FCFF) for Holt given the Cash Flow and Income Statement attached here Download attached here .

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