medium · Principles of Finance

When deriving FCFF from Net Income, how should 'Amortization of Intangibles' be treated?

1. It should be added back, just like depreciation, because it is a non-cash expense.
2. It is ignored because intangibles have no impact on enterprise value.
3. It is added to Capital Expenditures because it reflects the cost of acquiring brands or patents.
4. It should be subtracted, as it represents the declining value of a firm's intellectual property.

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