FCFE Equity approach & Revolving credit
Hi,
When valuing a company using the equity approach (ke) I'm suppose to discount the FCFE which are calculated as follows FCFE = FCFF – Int(1 – Tax rate) + Net borrowing.
My questions are:
1) What about equity injection and withdrawals? Do I not consider them in the FCFE, in the period when they occur?
2) If I have 1000 equity injection for a certain period, is that supposed to fund my cash deficit before I calculate a revolving credit to cover said cash deficit?
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