The Calculation of Free Cash Flow to the Firm Includes

question 98

Multiple Choice

The calculation of free cash flow to the firm includes all of the following except for

• A) Net income
• B) Marginal tax rate
• C) Change in working capital
• D) Gross plant and equipment spending
• E) Depreciation

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Definitions:

OASDI

Stands for Old-Age, Survivors, and Disability Insurance, a program that provides monthly benefits to retired individuals, survivors of deceased workers, and disabled workers funded through payroll taxes.

Federal Income Tax

The tax levied by the national government on individual or corporate income.

Allowances

Amounts deducted from an employee's gross pay for specific purposes such as taxes, health insurance, and retirement funds.

Overtime Rate

The rate of pay that is higher than the regular hourly rate, paid to employees for hours worked beyond the standard workweek.