3 pts Question 7 Which of the following statements is CORRECT? Free cash flow (FCF) is defined as follows: FCF - EBIT(1 - 1) + Depreciation and Amortization - Capital expenditures required to sustain operations - Required changes in net operating working capital. Changes in working capital have no effect on free cash flow. Net cash flow (NCF) is defined as follows: NCF - Net income - Depreciation and Amortization. Net cash flow is the same as free cash flow (FCF). Free cash flow (FCF) is defined as follows: FCF - EBIT(1 - 1)+ Depreciation and Amortization + Capital expenditures Which of the following statements is CORRECT? The more depreciation a firm reports, the higher its tax bill, other things held constant. People sometimes talk about the firm's net cash flow, which is shown as the lowest entry on the income statement, hence it is often called "the bottom line." Depreciation and amortization are not cash charges, so neither of them has an effect on a firm's reported profits. Net cash flow (NCF) is often defined as follows: Net Cash Flow - Net Income + Depreciation and Amortization Charges. Depreciation reduces a firm's cash balance, so an increase in depreciation would normally lead to a reduction in the firm's net cash flow