- This topic has 1 reply, 2 voices, and was last updated 8 years ago by
.
Viewing 2 posts - 1 through 2 (of 2 total)
- Posts
- Topics: 16
- Replies: 38
- ☆☆
Dear Sir,
In calculating the FCFE of the Ndege Co, why has the interest payment of the loan that Ndege will take from Vogel not being calculated in the FCFE? Was it assumed that the entire debt would be repaid upon formation of the new company? (Ndege Co)
Thank you very much sir,
But they have not taken the free cash flows to equity.
They have taken the free cash flows and discounted them at the cost of capital. We ignore interest when getting the free cash flows because it is effectively included in the cost of capital.
This gives the total value of the business. They have then subtracted the value of the loan to arrive at the value of the equity.
Viewing 2 posts - 1 through 2 (of 2 total)
- The topic ‘Vogel June 2015’ is closed to new replies.