FCFE and terminal value?
I'm trying to value a holding company that owns 3 projects, one of which has amortizing debt (changing leverage) for acquisition purposes. I'm fine with valuing the firm as a whole using FCFF and assuming it will be refinanced to a target D/E, but my questions are as follows:
1.- If I were to value the equity directly using FCFEs, how would I treat the terminal value (since the project is sold at an EBIT multiple after X years)? I'm guessing it's not going to be the same terminal value that I'm using for the firm as a whole, since there's debt.
2.- Again with the FCFE, since I'm refinancing the firm after acquisition, would the refinancing be a huge free cash flow to the equity, as there will be a net borrowing/principal repayment?