Management can make any form of distribution to the firm's shareholders using the company's free cash flow (FCF). The underlying objective is to maximize shareholder wealth by increasing the firm's value. Any use of FCF that negatively affects the firm's value is not considered a good use of the FCF.
Which of the following uses is considered to be a good use of free cash flow?
1. Invest in nonoperating assets
2. Invest in operating assets
3. Theoretically, there are some traditional ways of using FCF. If a company uses all of its FCF to pay off all of its debt, it would reap the maximum benefit from the tax-deductible component of interest payments toward the debt.
4. This statement is false because if the firm uses its FCF to pay off all of its debt, it would have and no deductible.
Answers (1)
Know the Answer?
Not Sure About the Answer?
Find an answer to your question ✅ “Management can make any form of distribution to the firm's shareholders using the company's free cash flow (FCF). The underlying objective ...” in 📘 Business if you're in doubt about the correctness of the answers or there's no answer, then try to use the smart search and find answers to the similar questions.
Search for Other Answers
You Might be Interested in
Memory performance is enhanced if the type of task at encoding matches the type of task at retrieval. this is called
Answers (1)
Rosie and her brother michael decided recently to purchase an rv together. they both want to use the rv to take their families camping. the price for the rv was $10,000.
Answers (1)
Joe an excutive recieves an email that appears to be from the finicial instution that provides his company credit cards the text of the email includes joe's name and the company name and states that there is problem with joe's credit card the email
Answers (1)
Which of the following materials could be potentially infected with bloodborne pathogens, assuming they are not mixed with human blood? Semen or vaginal secretions Sweat Saliva Feces Tears
Answers (1)
Which of the following hiring procedures provides the most control over the accuracy of information submitted on an employment application?
Answers (1)
New Questions in Business
Select the correct answer from the drop-down menu. Which type of college credit program does the statement describe?
Answers (1)
Anderson's Furniture Outlet has an unlevered cost of capital of 8%, a tax rate of 35%, and expected earnings before interest and taxes of $1,500. The company has $3,500 in bonds outstanding that have a 5% coupon and pay interest annually.
Answers (1)
A residential zoning category requires at least 7,500 square feet per lot. The developer is reserving 30% of the land to streets, sidewalks, a park, and a community center. The tract of land for development consists of 120 acres.
Answers (1)
On May 1, 2018 ABC Corporation purchased $1,500,000 of 12% bonds, interest payable on january 1 and july 1, for $1,406,500 plus accrued interest. The bonds mature on January 1,2024.
Answers (1)
A consumer is making purchases of products Alpha and Beta such that the marginal utility of product Alpha is 30 and the marginal utility of product Beta is 40. The price of product Alpha is $5, and the price of product Beta is $10.
Answers (1)