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      Question

      Which of the following decisions do not affect the Free

      Cash Flow to equity?
      A Share re-Purchases Correct Answer Incorrect Answer
      B New Share Issues Correct Answer Incorrect Answer
      C Dividend Paid Correct Answer Incorrect Answer
      D None of the above Correct Answer Incorrect Answer
      E All of the above Correct Answer Incorrect Answer

      Solution

      Any financial decisions that affect below Free Cash flow to Equity like share re-purchases, new share issues, the dividend paid to equity shareholders do not affect free cash flow to firm and equity. The money left after payment to investors (like bondholders and common shareholders) can still be used for payment in form of dividends or share repurchases. So any decisions regarding these things do not affect the calculation of Free cash flow to the firm and equity.┬а

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