NENTE CO (Jun 12 Adapted) FCFE

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August 4, 2022 at 5:29 am #662413
mathurya
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Hi,

Why is the interest of 7% ($455) not deducted from the Equity value (FCFE) calculation? Only the debt of $6500,000 is deducted.

Thanks
August 4, 2022 at 9:41 am #662427
John Moffat
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As I do explain in my free lectures, discounting the free cash flows (which are before interest) at the WACC gives the total value of the business (equity + debt). Therefore the value of the equity is the total value less the value of the debt.
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