Price to free cashflow10/7/2023 The following are inputs to be entered into the spreadsheet as assumptions. FCFE can be thought of as follows:įCFE = FCFF + New debt issued - Debt repayments The main difference between Free Cash Flow to Equity (FCFE) and Free Cash Flow to Firm (FCFF) is the treatment of debt. The final cash flow discounted with the cost of equity provides the equity value. The terminal value of the firm's equity beyond the projection horizon is also estimated and added to the cash flow. The Free Cash Flow to Equity (FCFE) is calculated as follows:įCFE = EBIT * (1-Tax rate) + Depreciation - Capital expenditure - Change in Working Capital + New debt issued - Debt repayments The Free Cash Flow to Equity is defined as the sum of the cash flows to the equity holders in the firm. This spreadsheet values a company's share price by using the Free Cash Flow to Equity model. Free Cash Flow to Equity Spreadsheet Company Share Price Valuation using Free Cash Flow to Equity
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