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Could you clarify my understanding of the treatment of interest costs when calculating NPV/FCF/FCFE.
I was under the impression that you always exclude the interest costs from the Cash outflows as it’s impact is included within the companies discount rates. But, the following two questions have different treatments:
– Pursuit (June 11)
– Stanzial Inc (Deember 2006)
Is it because Stanzial is FCFE and when calculating FCFE we include interest (ie, take away every debt element form the equityholders)?
So does that mean:
FCFE: take out interest payments
FCF/NPV: ignore interest payments
https://opentuition.com/forum/ask-acca-tutor-forums/ask-the-tutor-acca-advanced-financial-management-afm-exams/ this is where you need to ask John if you want him to reply quicker.