Which of the Following Formulas Correctly Estimates Free Cash Flows

question 49

Multiple Choice

Which of the following formulas correctly estimates free cash flows to the firm?

• A)FCFF = EBIT × (1 + tax rate)+ non cash expenses - capital expenditures - net increases in working capital
• B)FCFF = EBIT × (1 - tax rate)+ non cash expenses - capital expenditures - net increases in working capital
• C)FCFF = EBIT × (1 - tax rate)+ non cash expenses + capital expenditures - net increases in working capital
• D)FCFF = EBIT × (1 - tax rate)- non cash expenses + capital expenditures - net increases in working capital

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