How do you identify from the Question that it wants a FCF or a FCFE valuation?
I am confused by the both methods as they are almost the same.
I understand FCF is for shareholders and debt holder but FCFE is also for shareholders too?
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Using FCF or FCFE
9y ago#1The question will make it clear somewhere.
FCF looks at the total cash flows available for all investors and is discounted at the WACC to get the total value of the business.
FCFE looks at the flows available only for shareholders (so after interest on debt) and is discounted at the shareholders required return to get the value of the equity.
Sir, how do i know if i should calculate value of equity using discounted FCF - MV of debt, or using discounted FCFE?
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