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Good day!
I am a bit confused how to calculate company value based on free cash flows. Often it is required to come to reasonable share price.
BPP study book says that I need to discount free cash flows using WACC and then substract from resulting NPV debt value. However, in the answer to 6/13 50 marker they do not substract debt to come to company value-just assume that NPV gives company value.
Can you please clarify.
The NPV gives the overall value of the company.
Subtracting the value of the debt from it gives the value of the equity in the company.
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