FCFF is the amount left over for all the investors of the firm, both bondholders and stockholders while FCFE is the residual amount left over for common equity holders of the firm. FCFF is used in DCF valuation to calculate enterprise value or the total intrinsic value of the firm.
FCFF = NI + Deprec. + [Interest expense x (1- tax rate)]- FCInv. - WCInv.
FCFE = NI + Deprec. - FCInv. - WCInv. + Net borrowing
where Depreciation is depreciation expense; FCInv and WCInv is the investment in fixed and working capital respectively.
FCFF can also by calculated as NOPAT+ Deprec. - FCInv. – WCInv, since NOPAT excludes the costs and tax benefits of debt financing.
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