Question

Free cash flows are important variables in calculating the:

Group of answer choices

projected return on the firm's total assets

depreciation expense

projected annual fixed expenses

net present value

Answer 1

Free cash flows are used to calculate net present value of the project and to decide upon the selection of the project.

So, Option D is correct answer.

Option A is incorrect as projected return on the firm's total assets as it use net income but not Free cash flow.

Option B is incorrect as Depreciation expenses are used to calculate FCF, not FCFs are used to calculate depreciation.

Option C is incorrect as projected annual fixed expenses are used to calculate FCF, not FCFs are used to projected annual fixed expenses.