Problem 3-24 Free Cash Flow (LO3)

The following table shows an abbreviated income statement andbalance sheet for Quick Burger Corporation for 2016.

INCOME STATEMENT OF QUICK BURGER CORP., 2016
(Figures in $ millions)
Net sales	$	27,575
Costs		17,577
Depreciation		1,410
Earnings before interest and taxes (EBIT)	$	8,588
Interest expense		525
Pretax income		8,063
Taxes		2,822
Net income	$	5,241

BALANCE SHEET OFQUICK BURGER CORP., 2016
(Figures in $millions)
  Assets	2016		2015		Liabilities and Shareholders' Equity	2016		2015
Current assets									Current liabilities
  Cash and marketable securities		2,344				2,344			Debt due for repayment		—				391
  Receivables		1,383				1,343			Accounts payable		3,411				3,151
  Inventories		130				125			Total current liabilities		3,411				3,542
  Other current assets Â		1,097				624
  Total current assets		4,954				4,436
Fixed assets									Long-term debt		13,641				12,142
  Property, plant, and equipment		24,685				22,843			Other long-term liabilities		3,065				2,965
  Intangible assets (goodwill)		2,812				2,661			Total liabilities		20,117				18,649
  Other long-term assets		2,991				3,107			Total shareholders’ equity		15,325				14,398
  Total assets		35,442				33,047			Total liabilities and shareholders’ equity		35,442				33,047

In 2016 Quick Burger had capital expenditures of $3,057.

a. Calculate Quick Burger’s free cash flow in2016. (Enter your answer in millions.)

b. If Quick Burger was financed entirely byequity, how much more tax would the company have paid? (Assume atax rate of 35%.) (Do not round intermediate calculations.Enter your answer in millions rounded to 2 decimalplaces.)

c. What would the company’s free cash flow havebeen if it was all-equity financed?