Sir, Q1 part (ii) FCFF is 316.30. I do not understand why we calculate the value of equity as a remainder of 256.30 (316.3-60). Why is the value of equity not as per the balance sheet after restructuring which is 310?
Please help me clear my doubts. Thanks a lot.
Ask the Tutor ACCA AFM
Doric Co (Q1) December 2010
7y ago#1As you should know from my lectures, discounting the free cash flow to the firm at the WACC gives the total value of the business - debt plus equity.
The value of equity in the SOFP is the book value and has no relation to the market value.
Sign in to reply to this topic.