Question: Free cash flows FCF used in DCF valuations discussed in

Free cash flows (FCF) used in DCF valuations discussed in the chapter are defined as follows:
FCF to debt and equity = Earnings before interest and taxes × (1-tax rate) + Depreciation and deferred taxes-Capital expenditures -/+ Increase/decrease in working capital
FCF to equity = Net income + Depreciation and deferred taxes - Capital expenditures -/+ Increase/decrease in working capital +/- Increase/decrease in debt.
 Which of the following items affect free cash flows to debt and equity holders? Which affect free cash flows to equity alone? Explain why and how.




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  • CreatedFebruary 11, 2015
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