Please show all work and explain how solution was reached Parbonetti Corporation

Question

Please show all work and explain how solution was reached

Parbonetti Corporation recently reported $8,250 of sales, $4,500 of operating costs other than depreciation, and $950 of depreciation. The company had no amortization charges, it had $3,250 of outstanding bonds that carry a 6.75% interest rate, and its federal-plus-state income tax rate was 35%. In order to sustain its operations and thus generate sales and cash flows in the future, Parbonetti Corporation was required to spend $750 to buy new fixed assets and to invest $250 in net operating working capital. How much free cash flow did Wells generate?

Explanation / Answer

How much free cash flow did Wells generate

=EBIT*(1-tax rate)+depreciation-capital expenses-net operating working capital investments

=((8250-4500-950)*(1-35%))+950-750-250

=1770

the above is answer..

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