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23 January, 20:04

X Inc. expects net cash flow from operating activities to be $ 110 comma 000 , and the company plans purchases of equipment of $ 80 comma 000 and repurchases of stock of $ 18 comma 000. What is Duckalo's free cash flow?

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  1. 23 January, 20:20
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    Answer: Duckalo's free cash flow = $30,000

    Given:

    Net cash flow from operating activities = $110,000

    Purchases of equipment = $80,000

    Repurchases of stock = $18,000

    We can compute free cash flow as:

    Free cash flow = Net cash provided by operating activities - cash payments for planned investments in long-term assets - cash dividends

    Free cash flow = $110,000 - $80,000 - $0 = $ 30,000
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