Calculation of equity value of an entity – FCF?

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September 1, 2020 at 4:48 am #582936
Poojamuchhal
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I had a confusion while calculating the equity value of an entity.
I calculated Free cash flows to equity and discounted it at cost of equity.
but the suggested answer was Free cash flows to firm , discounted at cost of capital and then equity proportion was calculated out of it (using the debt equity ratio)
Is my treatment wrong?
September 1, 2020 at 8:36 am #582961
John Moffat
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Your treatment is not wrong – either approach is fine. Which approach to use depends on the information given in the question.
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