What is the free cash flow to equity holders for a firm with free cash flow of $7000,after-tax interest expense of $1000,and an increase in debt of $3000?
A)$6000
B)$7000
C)$8000
D)$9000
E)$10,000

Question

Quizplus · Accepted Answer

Free cash flow to equity (FCFE) is calculated as free cash flow to the firm plus net borrowing minus interest expense (after tax). So, FCFE = $7000 (free cash flow) + $3000 (increase in debt) - $1000 (after-tax interest expense) = $9000.

What Is the Free Cash Flow to Equity Holders for a Firm