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In this question, why FCFE in year 2005 is $210m-$120.2m=$87.2m?
In my opinion, FEFE should deduct repayment of secured loans $31m and interest paidThe figure of 87.2M is after interest paid.
With regard to the repayment of loans, for 2005 alone you would be correct. However we are estimating the future FCFE’s (in order to put a value on the company) and so we are using the growth rate calculated in part (b) and using the current FCFE before repayment of loans on the assumption that the repayments will not be repeating in the future.
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