What does the concept of free cash flow represent

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Nova Electrics anticipates cash flow from operating activities of $11 million in 20X1. It will need to spend $4.5 million on capital investments to remain competitive within the industry. Common stock dividends are projected at $0.80 million and preferred stock dividends at $0.30 million.

Problem a. What is the firm's projected free cash flow for the year 20X1? (Enter your answer in millions of dollars rounded to 2 decimal places.)

Problem b. What does the concept of free cash flow represent?

multiple choice

Option 1: Free cash flow represents the funds that are available for special financing activities, such as a leveraged buyout.
Option 2: Free cash flow equals cash flow from operating activities.
Option 3: Free cash flow represents the funds that are available for investing activities, such as purchasing plant and equipment assets.

Reference no: EM132976891

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