Given the Following Data for a Given Period, Compute the Free

question 29

Multiple Choice

Given the following data for a given period, compute the free cash flow to the firm: Net Income = $12,000
After-tax Interest Expense = $2,000
Depreciation = $1,000
Increase in NWC = $2,000
Capital Expenditures = $1,000

• A) $10,000
• B) $11,000
• C) $12,000
• D) $13,000

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Definitions:

Rights Offering

A financial opportunity offered to a company's existing shareholders to purchase additional shares directly from the company at a predetermined price, usually at a discount, within a specified period.

Subscription Price

The fixed price at which existing shareholders can buy additional shares before the new shares are offered to the public.

Market Price

The existing exchange rate for assets or services within a marketplace environment.

Venture Capital

A form of financing provided to startups and small businesses with high growth potential in exchange for equity.