Would you ever use wacc to discount LFCF, or cost of equity to discount uFCF?
This was an interview question I got. I couldn't think of a scenario of when to do that so I just said no and explained my thoughts on how WACC = cost for all investors and how it pairs with uFCF
Thanks
Could be a trick question. You can use them when they are the same figure. If a company has 0 debt or interest, then technically WACC = Cost of equity and UFCF = LFCF so therefore they would be interchangeable.
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