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Q.I. DISCOUNTED FREE FLOW ANALYSIS (chapter 6) IBM Income Statement for year ended December 31, 2012 Income Statement Items Cash flow from operations Payments for property, plant, and equipment Proceeds from disposition of property, plant, and equipment Investments and business acquisitions (net) Amount (In Millions of Dollars) $19,586 $4,082 $410 $3,123 IBM paid $1.022 million of interest to debt holders in 2012 and had an effective tax rate of 24 percent. 1. From the above information, compute free cash flow. 2. IBM is financed with one-third debt and two-thirds, equity, and the after-tax required on debt is 5 percent, and the required rate of return on equity 10 percent. Calculate the WACC for IBM