Question $4$

$10$ points

Saved

How will an increase in invested capital $($IC$)$ in a given year $($e$.$g$.,$ Year $1)$ affect free cash flow $($FCF$)$ and ROIC in that year $($e$.$g$.,$ Year $1)$ if all other things are kept equal $($e$.$g$.,$ Year $1$ NOPLAT$)?$ Assume we use the AVERAGE invested capital $($e$.$g$.,($Year $0$ IC Year $\frac{1}{1}C)$ to calculate ROIC.

A$.$ It will increase both FCF and ROIC.

B$.$ It will decrease both FCF and ROIC.

C$.$ It will increase FCF but decrease ROIC.