Problem
Blue Ltd.'s capital constitutes a debt of $200,000 and equity of $300,000. It recently announced a net income of $275,000. The company managers have invested $90,000 in fixed capital and $60,000 in working capital. The company's only non-cash expense for the period was $40,000. If the company's average after-tax interest on debt is 8%, what's the free cash flow to the firm (FCFF)?