The correct answer is: C. -Rs 4,000.00
Free cash flow is the cash that a company generates from its operations after taking into account capital expenditures and changes in working capital. It is a measure of a company’s financial health and ability to generate cash.
To calculate free cash flow, we use the following formula:
Free cash flow = Net operating profit after taxes (NOPAT) + Depreciation and amortization – Capital expenditures – Changes in working capital
In this case, we are given that NOPAT is Rs 11,000, depreciation and amortization is Rs 2,000, capital expenditures is Rs 7,000, and changes in working capital is Rs 1,000. Substituting these values into the formula, we get:
Free cash flow = Rs 11,000 + Rs 2,000 – Rs 7,000 – Rs 1,000 = Rs 4,000
Therefore, the free cash flow is Rs 4,000.
Option A is incorrect because it is the net investment in operating capital, not the free cash flow.
Option B is incorrect because it is the net operating profit after taxes, not the free cash flow.
Option D is incorrect because it is the sum of the net operating profit after taxes and the capital expenditures, not the free cash flow.