Question
Indicate the effect on this periods FCFF and FCFE of a change in each of the items listed here. Assume a $100 increase in each
Indicate the effect on this periods FCFF and FCFE of a change in each of the items listed here. Assume a $100 increase in each case and a 40 percent tax rate.
7. A $100 increase in interest expense will cause FCFF (Free Cash Flow to the Firm) to...
decrease $60.
decrease $40.
decrease $100.
increase $40.
not change.
increase $60.
increase $100.
8. A $100 increase in interest expense will cause FCFE (Free Cash Flow to the Equity) to...
decrease $60.
increase $100.
decrease $40.
increase $40.
increase $60.
not change.
decrease $100.
9. A $100 increase in EBIT will cause FCFF (Free Cash Flow to the Firm) to...
increase $100.
increase $40.
increase $60.
decrease $60.
not change.
decrease $40.
decrease $100.
10. A $100 increase in EBIT will cause FCFE (Free Cash Flow to the Equity) to...
decrease $60.
decrease $100.
decrease $40.
not change.
increase $60.
increase $100.
increase $40.
11. A $100 increase in accounts receivable will cause FCFF (Free Cash Flow to the Firm) to...
increase $100.
not change.
decrease $60.
increase $40.
decrease $40.
increase $60.
decrease $100.
12. A $100 increase in accounts receivable will cause FCFE (Free Cash Flow to the Equity) to...
increase $60.
decrease $100.
decrease $60.
decrease $40.
not change.
increase $100.
increase $40.
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Handbook Of Income Distribution Volume 2B
Authors: Anthony B. Atkinson, Francois Bourguignon
1st Edition
0444594299, 978-0444594297
