To determine the net debt repayment, we use the relationship between FCFF and FCFE, adjusting for the after-tax interest expense. The correct calculation is as follows:

1. FCFF is given as 2,500.
2. FCFE is given as 1,300.
3. Interest paid is 260, and the tax rate is 40%, so the after-tax interest is 260 * (1 - 0.40) = 156.

Rearranging the formula for FCFF:

$FCFF = FCFE + \text{Net debt repayment} + \text{After-tax interest}$

Substituting the known values:

$2,500 = 1,300 + \text{Net debt repayment} + 156$

Solving for Net debt repayment:

$\text{Net debt repayment} = 2,500 - 1,300 - 156 = 1,044$

Thus, the correct answer is B (1,044). Incorrect options:

• A (940): Incorrectly subtracts the full interest amount without adjusting for taxes.
• C (1,200): Assumes interest is classified as a financing activity, leading to an incorrect calculation.