I'm trying tofor a financial company, but am a bit confused about how to come up with and because a large portion of the company's income is from interest (i.e. the company borrows a substantial amount of money (e.g. through customer deposits) and lends this out at a higher interest rate).
In this case it doesn't seem to make sense to use FCF that equals EBIT(1-t)+D&A-capex-change in working capital, because this excludes the huge amount of interest income.
Also, for determining WACC, what should I use as the cost of debt (the rate on deposits it pays customers, or just the rate it pays on its bonds)?
Any ideas would be very much appreciated.