Question #128
Reading: Reading 21 Free Cash Flow Valuation
PDF File: Reading 21 Free Cash Flow Valuation.pdf
Page: 63
Status: Unattempted
Correct Answer: A
Question
The difference between free cash flow to equity (FCFE) and free cash flow to the firm (FCFF) is:
Answer Choices:
A. after-tax interest and net borrowing
B. earnings before interest and taxes (EBIT) less taxes
C. before-tax interest and net borrowing
Explanation
FCFE = FCFF – [interest expense] (1 – tax rate) + net borrowing.