Question

Is this included when computing free cash flows for a project? Explain why it is or isn't.

Research and Development Costs

Answer 1

Research and development cost is not included in the While calculating FCF
FCF - Free cash flow is a measure how cash business generate after all Fixed capital expenditure and working capital expenditure.
Free cash flow is calculated after all capital expenditure or funding operations to payment of dividend or Share buyback. Its measure a company financial performances

Free Cash Flow = Operating Cash Flow - Capital Expenditure.

Free cash flow are of two types-

• Free cash flow to firm
• Free cash flow to equity
  Reserach and Development cost is excluded while calculating FCF. FCF arise after all operating expenses meet and rest of cash fistribute to shareholders by payment of dividend, reduction of debt.

I hope this clear your doubt.

Do give a thumbs up if you find this helpful.