Series 79 practice questioneasyDCF Analysis
When projecting unlevered free cash flow in a DCF, which of the following is typically subtracted from EBIT after tax?
- AInterest expense
- BShare repurchases
- CCapital expenditures✓ Correct answer
- DDividends paid
Explanation
Why C — Capital expenditures
Capital expenditures are subtracted when calculating unlevered free cash flow. Interest expense and dividends are excluded in unlevered cash flow, while share repurchases are a financing activity.
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