Q 20 page 351 book 4 CFA curricium- fcff

For this particular question i am trying to use the ebitda method of calculation and I cannot arrive at the correct answer. I.e the calculations are 1178*(0.68)*270*(0.68)- 523 mln - 53mln. why is this not correct? what am i missing here?

Im happy to paste the full question here if that helps anyone.

Coincidentally i did FCF valuation today so I will help you out. If you’re using the EBITDA method, ensure you’re using this formula:

EBITDA(1-TAX RATE) + NCC*Tax rate - FCinv - WCinv

Don’t forget to exclude cash and notes payable from your working capital calculation.

yep thats the exact formula i used. I.e. i included depreciation in there.

I got the answer. How come you’re not ?

can you share your calculations please.

Make sure you add the depreciation * tax and not depreciation * (1-t)

yes I did (1178*0.68)+270*(0.32)-523-66= $298. the answer is 308. still not seeing where i am going wrong.

Working capital isnt 66, its 57.

It’s spelled out in the solution…

WCInv = Increase in accounts receivable + Increase in inventory – Increase in accounts payable – Increase in accrued liabilities = (770 – 711) + (846 – 780) – (476 – 443) – (149 – 114) = $57 million