giants2010

I got an 83% on it yesterday. Although I did do the same test about 1.5 months ago as my first practice test (wanted to do a hard one to get a real sense of where I was struggling, needless to say it was EVERYTHING!). I got a 60% on it the first time, so if I had to guess I would probably get a mid/high 70s if it was my first go round.

I had a question on #39 though

"If BioTLabs establishes a dividend and issues additional debt, the most likely effect on FCFF will be:"

a) no effect
b) a decrease in FCFF
c) an increase in FCFF

I put C, but the answer was A stating that changing the capital structure by increasing debt will have no impact on FCFF but will initially increase FCFE blah blah blah.

I disagree with this. If you increase the amount of debt FCFF will increase by the amount of the tax shield generated by the interest payment by the amount of int exp x tax rate.

Am I missing something here?