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why is the examiner deducting DEBT of 40 m from FCFF to make it FCFE isn’t FCFF the right way to measure value of Nedge Company.Kindly explain
Hi ,
FCF that you get is the value of the whole company. To get the cost of equity you have to remove the debt element.
What is left is the value of equity and you can then use that to value shares and also find the cost of equity
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