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John Moffat.
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shaunak22
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using dividend VALAUTION model we get equity value of the company BUT if we use WACC instead of ke in dividends valuation model will the get total value of the company (Debt +equity)?
John Moffat
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Discounting the free cash flows to equity (i.e. the dividends) at the cost of equity (which is what the dividend valuation model is going) gives the MV of equity.
Discounting the free cash flows to the firm (i.e. before interest) at the WACC gives the MV of the firm (equity plus debt).
shaunak22
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