Author Question: Which of the following formulas correctly estimates free cash flows to the firm? A) FCFF = EBIT ... (Read 113 times)

Alygatorr01285 · **on:** Jul 11, 2018

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

Question 2

Your university is running a special offer on tuition. This year's tuition cost is 18,000. Next year's tuition cost is scheduled to be 19,080.

The university offers to discount next year's tuition at a rate of 6 if you agree to pay both year's tuition in full today. How much is the total tuition bill today if you take the offer?
A) 34,981.13
B) 36,000.00
C) 37,080.00
D) 38,160.00

cclemon1 · **Reply #1 on:** Jul 11, 2018

Answer to Question 1

B

Answer to Question 2

B
Explanation: B) Via Calculator: N = 1, I = 6, FV = 18,000, Solve for PV = 18,000+18,000 = 36,000.