Bartling energy systems recently reported $9,250 of sales, $5,750 of operating costs other than depreciation, and $700 of depreciation. the company had no amortization charges, it had $3,200 of outstanding bonds that carry a 5% interest rate, and its federal-+-state income tax rate was 35%. in order to sustain its operations and thus generate sales and cash flows in the future, the firm was required to make $1,250 of capital expenditures on new fixed assets and to invest $300 in net operating working capital. by how much did the firm's net income exceed its free cash flow?

Difference between net income and FCF =  $746.00

Explanation:

Bonds =  $3,200.00

Interest rate  5.00%

Tax rate 35.00%

Required capital expenditures (fixed assets) = $1,250.00

Required addition to net operating working capital $300.00

Sales = $9,250.00

Operating costs excluding depreciation $5,750.00

Depreciation = $700.00

Operating income (EBIT) = $2,800.00

Interest charges = $160.00

Taxable income (EBT) = $2,640.00

Taxes =  $924.00

Net income after taxes = $1,716.00

FCF = BIT×(1 – T) + Depreciation – Cap Ex – ΔNet Op WC

FCF = $1,820 + $700 – $1,250 – $300

FCF =  $970.00

Difference between net income and FCF =  $746.00

answer the amount a seller is paid minus the cost of production;

answer makes less frequent trips to the bank and firms make less frequent price changes;