FCFF calculation - issue with NCC and gains on asset sales

CFA Level II Equities
#1

An analyst collects the information below regarding a company for use in a discounted free cash flow model:

Net income for common shareholders 90
Interest expense 23
Increase in accounts payable 3
Increase in accounts receivable 7
Decrease in inventory 10
Preference dividend paid 5
Gain recognised after sale of asset 8
Marginal tax rate 25%
Depreciation expense 10
Fixed capital investment 12

FCFF is closest to : 108.25

I am struggling to understand why the gain is to be removed. This is related to NCC addition and removal from NI but I don’t get it.

It is even more confusing as sometimes the gains on sales from assets are deducted from the cost of capex.

Can someone explain this?

#2

Gains (or losses) aren’t cash flow.

You need to compute the cash flow (i.e., the selling price). Presumably, it’s subsumed in the “Fixed capital investment”, although that’s somewhat ambiguous.

Not a well presented data set.