I read from OpenTuition revision notes, the discount rate for Shareholder Value Added is the company’s WACC. But I think should be Ke, because SVA links to FCFE.
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DF for SVA
13y ago#1No.
SVA is present value of free cash flows discounted at WACC, less the value of the company's debt.
SVA is present value of free cash flows discounted at WACC, less the value of the company's debt.
Ya, I realize that the revision notes used FCF, therefore WACC is correct. If use FCFE, should it be Ke?
13y ago#3Yes it would be Ke (but we don't use FCFE when calculating SVA)
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