Alpine Corporation reported the following information for fiscal 2017 and 2016.

December 31 2017 2016

Operating assets $164,101 $153,211

Operating liabilities 120,785 114,836

Net cash flow from operations 46,709 39,540

Net operating profit after tax (NOPAT) 33,371 31,742

Discount factor 6.0% 6.0%

What are the company's free cash flows to the firm (FCFF) for 2017?

A. $28,430

B. $24,638

C. $28,907

D. $25,797

E. None of the above

Option (A) is correct.

Explanation:

Net Operating assets in 2017:

= Operating assets - Operating liabilities

= $164,101 - $120,785

= $43,316

Net Operating assets in 2016:

= Operating assets - Operating liabilities

= $153,211 - $114,836

= $38,375

Increase in net operating assets:

= $43,316 - $38,375

= $4,941

Company's free cash flows to the firm (FCFF) for 2017:

= Net operating profit after tax 2017 - Increase in net operating assets

= $33,371 - $4,941

= $28,430