EQUITY SHARES EQUATING THE RESULTS OF FCFF AND FCFE METHODS

Bartłomiej Cegłowski and Błażej Podgórski
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Bartłomiej Cegłowski: Koźmiński University
Błażej Podgórski: Koźmiński University

Financial Internet Quarterly, 2012, vol. 8, issue 2, 34-43

Abstract: The aim of the article is to present the method of establishing equity shares in weight average cost of capital (WACC), in which the value of loan capital results from the fixed assumptions accepted in the financial plan (for example a schedule of loan repayment) and own equity is evaluated by means of a discount method. The described method causes that, regardless of whether cash flows are calculated as FCFF or FCFE, the result of the company valuation will be identical.

Keywords: discount rate; free cash flow; company valuation; assessment of investment profitability (search for similar items in EconPapers)
Date: 2012
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Persistent link: https://EconPapers.repec.org/RePEc:wsz:fiq000:v:8:y:2012:i:2:id:825

DOI: 10.65748/fiqf-2012-0014

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