Answer:
$307 million
Explanation:
Iron ore Corporation reported a free cash flow of $106 million
The investment in operating capital is $189 million
Iron ore listed a depreciation expense of $39 million and a tax of $51 million on its income statement for 2008.
The first step is to calculate the operating cash flow
Free cash flow= Operating cash flow-Investment in operating capital
$106m= OCF-$189m
OCF= $106m+$189m
OCF= $295m
Operating cash flow= $295 million
Therefore, the EBIT can be calculated as follows
Operating cash flow= EBIT-Taxes+Depreciation
$295m= EBIT-$51m+$39m
$295m= EBIT-$12m
EBIT= $295m+$12m
EBIT= $307 million
Hence the iron ore's 2008 EBIT is $307 million.
