DR is used isn’t it?
i think it was more like V = FCFF/(wacc - g) - DebtValue That is the value of firm and divide that by number of shares to get stock value… where as in the FCFE calculation it doesn’t subtract the DebtValue. I could be wrong since I didn’t copy down the question… Do anyone remember q27 and its answer?
FCFE you have already removed the effect of Debt - Net Borrowing (remember). So FCFE gives you value of Equity FCFE – @ re --> Value of Equity FCFF --> @ WACC --> Value of FIRM.
good point, thx