Neas-Seminars

## FA Module 6 Free cash flow practice exam questions

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 By NEAS - 11/10/2018 11:04:52 PM FA Module 6 Free cash flow practice exam questions (The attached PDF file has better formatting.)[The following scenario applies to the next two questions.] A firm has the following figures for its GAAP financial statements: ●    Operating cash flow = 619●    Interest paid = 54●    Tax rate = 13%●    Non-cash charges (depreciation and amortization) = 78●    Fixed capital expenditures = 191●    Working capital expenditures = 134●    Shareholder dividends paid = 28●    New borrowing during the year = 73●    Debt repayment during the year = 48Question 6.1: Free cash flow to the firm What is the free cash flow to the firm?Solution 6.1: 619 + 54 × (1 – 13%) – 191 = 474.98(cash flow from operations + interest paid × (1 – the tax rate) – fixed capital investments)Question 6.2: Free cash flow to equity What is the free cash flow to equity?Solution 6.2: 619 – 191 + (73 – 48) = 453(cash flow from operations – fixed capital investments + net borrowing)