Free Cash Flow Valuation

Question 1

FCFF

Answer 1

FCFF = NI + NCC + [int*(1-tax rate)] - FCInv - WCInv

FCFF = CFO + int*(1-tax rate) - FCInv

FCFF = EBIT*(1-tax rate) + Dep - FCInv - WCInv

FCFF = EBITDA(1-tax rate) + (Deptax rate) - FCInv - WCInv

Question 2

FCFE

Answer 2

= FCFF - Int*(1-tax rate) + net borrowing

= NI + NCC -FCInv - WCInv + net borrowing

= CFO -FCInv + net borrowing