The formula for FCFF calculation is wrong - Interest is added there & deducted from FCFE... The interest expense rising every year doesn't make sense... How can it be a % of sales. Not like the debt par keeps changing every year... And the example at 37.23 is extremely confusing... Why aren't we discounting the first FCFF 3.25? Rounding off @47:07 has caused errors. Post discount multiple is 5.9664 & the end value is 288466.56
Thanks for the video, however there are some calculation errors in the slides, especially in the example starting from 56:09 and also the terminal value at 58:57
The after tax interest expense calculated doesn't make sense (35:50). Surely it should be 10% of the 5m par value? Or some increasing value of debt. It seems to be calculated as a % of depreciation.
At 22:09 you stated that the equity discount is estimated as 1 - [(1-DLOC)(1-DLOM)] but in the last example (1:09:50) you just sum the two discounts, could you clarify which method is generally expected in the exam?
I would stick with the initial formula and treat the last example as a calculation error and it does not make sense to simply use the sum of DLOC and DLOM to calculate.
Sir hope you make a video on employee compensation too
Thank you teacher ❤
The formula for FCFF calculation is wrong - Interest is added there & deducted from FCFE...
The interest expense rising every year doesn't make sense... How can it be a % of sales. Not like the debt par keeps changing every year... And the example at 37.23 is extremely confusing... Why aren't we discounting the first FCFF 3.25?
Rounding off @47:07 has caused errors. Post discount multiple is 5.9664 & the end value is 288466.56
Thanks for the video, however there are some calculation errors in the slides, especially in the example starting from 56:09 and also the terminal value at 58:57
The after tax interest expense calculated doesn't make sense (35:50). Surely it should be 10% of the 5m par value? Or some increasing value of debt. It seems to be calculated as a % of depreciation.
At 22:09 you stated that the equity discount is estimated as 1 - [(1-DLOC)(1-DLOM)] but in the last example (1:09:50) you just sum the two discounts, could you clarify which method is generally expected in the exam?
I would stick with the initial formula and treat the last example as a calculation error and it does not make sense to simply use the sum of DLOC and DLOM to calculate.
FCFF method formula seems wrong. In FCFF, Post tax interest should be added back.
Yep! I was looking at it thinking hmmmm ....
Yup True that...
Thank ❤