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

question 33

Multiple Choice

Given the following data for a given period, compute the free cash flow to the firm: Net Income = $5,000
After-tax Interest Expense = $500
Depreciation = $500
Increase in NWC = $1,000
Capital Expenditures = $2,000

• A) $3,000
• B) $3,500
• C) $3,700
• D) $3,900

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Definitions:

Expected Cash Flows

Forecasted cash receipts and payments over a specified period, often used for investment appraisal.

Rate of Return

The profit or deficit experienced from an investment during a set timeframe, represented as a percent growth from the initial investment value.

Capital Budgeting

The process of planning and managing a firm's long-term investments in projects and assets, considering their potential returns and risks.

Long-Term Commitment

Refers to obligations or investments that a company plans to hold or is expected to fulfill over an extended period, typically beyond one year.