The correct answer is C. Rs 7,000.00.
Free cash flow is the cash flow available to a company after it has paid for its operating expenses, capital expenditures, and debt service. It is calculated by subtracting capital expenditures and net working capital changes from operating cash flow.
Investment outlay cash flow is the cash flow that is used to purchase new assets or to expand existing assets. It is calculated by subtracting the depreciation and amortization expenses from the capital expenditures.
Salvage cash flow is the cash flow that is received when an asset is sold at the end of its useful life. It is calculated by subtracting the book value of the asset from the sales price of the asset.
In this case, the free cash flow is Rs 15,000, the operating cash flow is Rs 3,000, and the investment outlay cash flow is Rs 5,000. Therefore, the salvage cash flow is calculated as follows:
Salvage cash flow = Free cash flow + Investment outlay cash flow – Operating cash flow
= Rs 15,000 + Rs 5,000 – Rs 3,000
= Rs 7,000.00
Therefore, the correct answer is C. Rs 7,000.00.
Here is a brief explanation of each option:
- Option A: Rs 17,000.00. This is the incorrect answer because it is the sum of the free cash flow and the investment outlay cash flow. However, the salvage cash flow is not equal to the sum of the free cash flow and the investment outlay cash flow.
- Option B: -Rs 17,000.00. This is the incorrect answer because it is the negative of the sum of the free cash flow and the investment outlay cash flow. However, the salvage cash flow is not equal to the negative of the sum of the free cash flow and the investment outlay cash flow.
- Option C: Rs 7,000.00. This is the correct answer because it is the salvage cash flow calculated as the difference between the free cash flow and the investment outlay cash flow.
- Option D: -Rs 7,000.00. This is the incorrect answer because it is the negative of the salvage cash flow calculated as the difference between the free cash flow and the investment outlay cash flow.