Hello Sir,
For this lecture of example 2:
https://opentuition.com/acca/afm/the-valuation-of-mergers-and-acquisitions-part-1-acca-afm-lectures/
why the free cash flows do not deduct the loan repaid as its also cash flow and the free cash flows are for equity holders?
Thank you.
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valuation of mergers and acquisition
Hello Sir, after watching the lecture of https://opentuition.com/acca/afm/the-valuation-of-mergers-and-acquisitions-part-3-acca-afm-lectures/
I already understand the answer is for free cash flows for the firm(for the query above),
but I have one more doubt for the free cash flows for equity is that why the loan raised from debt holders will belong to the equity holders as it added to the free cash flows of the firm after deducting the int and loan repaid?What is the logic for the debt raised increasing the free cash flows to equity?Thank you.
6y ago#2The free cash flow to equity is after subtracting the interest paid on loans - it is the cash available for the shareholders.
The free cash flow only is the cash available for both the loan interest and the amount available for shareholders - it is the total cash available for all the providers of finance.
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