Free ACCA & CIMA online courses from OpenTuition

Free Notes, Lectures, Tests and Forums for ACCA and CIMA exams

ACCA December Exams

Post comments & Vote in Instant poll >>

20% off ACCA & CIMA Books

OpenTuition recommends the new interactive BPP books for March 2025 exams.
Get your discount code >>

NENTE CO (Jun 12 Adapted) FCFE

Forums › Ask ACCA Tutor Forums › Ask the Tutor ACCA AFM Exams › NENTE CO (Jun 12 Adapted) FCFE

Viewing 2 posts - 1 through 2 (of 2 total)
  • Author
    Posts
  • August 4, 2022 at 5:29 am #662413
    mathurya
    Participant
    • Topics: 11
    • Replies: 5
    • ☆

    Hi,

    Why is the interest of 7% ($455) not deducted from the Equity value (FCFE) calculation? Only the debt of $6500,000 is deducted.

    Thanks

    August 4, 2022 at 9:41 am #662427
    John Moffat
    Keymaster
    • Topics: 57
    • Replies: 54500
    • ☆☆☆☆☆

    As I do explain in my free lectures, discounting the free cash flows (which are before interest) at the WACC gives the total value of the business (equity + debt). Therefore the value of the equity is the total value less the value of the debt.

  • Author
    Posts
Viewing 2 posts - 1 through 2 (of 2 total)
  • You must be logged in to reply to this topic.