Which of the following is the correct algebraic expression of a firm's cash flows (Ct) ,after interest payments and corporate tax payments,to its debt and equity holders? (The corporate tax rate is TC ,the pre-tax cash flows is Xt,and interest payments of rDD)
A) Ct= (Xt - rDD) (1 - TC) + rDD
B) Ct= (Xt + rDD) (1 - TC) + rDD
C) Ct= (Xt - rDD) (1 - TC) - rDD
D) Ct= (Xt - rDD) (1 + TC) + rDD
Correct Answer:
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