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Session 7 Which of the following items affect free cash flows to debt and equity holders? Which affect free cash flows to equity alone? Explain

Session 7 Which of the following items affect free cash flows to debt and equity holders? Which affect free cash flows to equity alone? Explain why and how. All answers assume a tax rate > 0. An increase in accounts receivable A decrease in gross margins An increase in property, plant, equipment An increase in inventory Interest expense An increase in prepaid expenses An increase in notes payable to the bank

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