Answer:
Free cash for first year is $98.75
Explanation:
Sales = $250 million
Less: Costs = $125 million
Less: Depreciation = $50 million
Earning before Tax = $75 million
Less: Tax 35% (75 x 35%) = $26.25 million
Net Income = $ 48.75 million
Free cash flow = Net Income + Non cash Expenses - Increase in working capital - Capital Expenditure
Free cash flow = 48.75 million + 50 million - 0 - 0
Free cash flow = 98.75 million