Nova Electrics anticipates cash flow from operating activities of $9 million in 20X1. It will need to spend $7.0 million on capital investments to remain competitive within the industry. Common stock dividends are projected at $0.30 million and preferred stock dividends at $0.25 million. a. What is the firms projected free cash flow for the year 20X1? (Enter your answer in millions of dollars rounded to 2 decimal places.)

b. What does the concept of free cash flow represent?

• Free cash flow represents the funds that are available for special financing activities, such as a leveraged buyout.

• Free cash flow represents the funds that are available for investing activities, such as purchasing plant and equipment assets.

• Free cash flow equals cash flow from operating activities.