Help with Valuation

Hi everyone,

I hope you're all doing well.

I'm currently working on a valuation using the Free Cash Flow to Equity (FCFE) method to evaluate an asset. For exercise purposes, consider the following FCFE projections:

• Year 1: (250)
• Year 2: (50)
• Year 3: 50
• Year 4: 150
• Year 5: 200
• Positive cash flow continuing into perpetuity

It's important to note that the business plan resulting in this cash flow includes a cash injection of US$200 million in the middle of Year 1. This injection is not reflected in the FCFE of (250) but is included in the accounting cash flow statement. This primary capital injection is necessary for investments in the company and to enable the business plan to succeed.

Given this context, I have a couple of questions:

1. How do I calculate the equity value pre-money? Should I discount the FCFE as stated above, or should I add the capital injection of US$200 million in Year 1, resulting in an FCFE of (50)?
2. How do I calculate the equity value post-money? Should I discount the FCFE as stated above and then subtract the primary capital injection, or should I consider the capital injection in Year 1 and then subtract it from the resulting valuation?

Thank you very much for your help.

Best regards.