Free Cash Flow Valuation
Free CFA Level II lesson in Equity Valuation. 13 min read, ~1,909 words.
FCFF = NI + Dep + Int(1-t) - CapEx - delta WC, the interest add-back is after-tax. FCFE = NI + Dep - CapEx - delta WC + Net Borrowing, equivalently FCFE = FCFF - Int(1-t) + Net Borrowing. FCFF is discounted at WACC (gives enterprise value); FCFE is discounted...
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What this lesson covers
- Content
- Example 1
- Example 2
- Common Mistakes
- Check Your Understanding
- Exam Shortcuts
Learning objectives
- free cash flow valuation
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