Best way to calculate Equity Value?

Monkeys,

Confused about how to calculate Equity value. i learned that you discount levered free cash flow at the cost of equity and that = Equity value. But, what if you calculate Enterprise value by discounting FFCF, and then add cash, investments and non-core business assets and subtract debt and preferred shares according to their market value? Wouldn't that also = equity value. Are both legitimate methods or am I not understanding something here?

 

Sounds correct, however if I run the numbers for a fictional stream of cash flows (ignoring terminal value), I get slightly different results.

Horizon: 5 years Net Debt: $100MM Interest: $400K UFCF: $350MM (const.) LFCF: $346MM (const.) WACC: 10% CoE: 12.7%

--> EV based on UFCF and WACC: $1,326,775,369.29 --> Equity Value (EV-Net Debt): $1,226,775,369.29 --> Equity Value based on LFCF and COE: $1,225,923,076.81

 

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