Question text

Given that a company follows U.S. GAAP, which of the following items must be added to CFO to compute FCFF?

Select one:

a. After-tax interest expense.

b. Dividends paid.

c. Dividends received.

Question 11

Question text

Consider the following statements:

Statement 1: Non-cash charges that appear after EBIT on the income statement must be added back to EBIT when computing FCFF.

Statement 2: The book value of non-operating assets must be added to the value obtained from the FCF model when computing the total value of a company.

Which of the following is most likely?

Select one:

a. Only Statement 1 is correct.

b. Only Statement 2 is correct.

c. Both statements are incorrect.