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Dear John,
Is there any difference in calculation of Free Cash Flow to Equity in order to calculate the dividend capacity vs. in order to calculate the business value? I am confused…
Thank you so much!
Best regards,
MargaritaDiscounting the free cash flow to equity at the cost of equity gives the market value of the equity.
Discounting the free cash flows to the firm at the WACC gives the market value of the business (equity + debt).
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