Suppose you're looking at a firm with $200m in EBIT, interest expenses of 10m, an average tax rate of 30%, and depreciation of $80m. They are expected to spend $100m on new property, plant, and equipment this year, and working capital is expected to be $85m ($15m higher than previous year).
a) Calculate this company's operating cash Flow.
b) Calculate this company's Free Cash Flow (also called "Cash Flow to the Firm").
c) If this company does not expect to issue or retire any debt this year, then how much of its free cash flow will be used to pay bondholders, and how much will be left for shareholders?