You do the equation for FCFF using WACC and get the firm value (EV). My question is why isn’t cash+short term investments also subtracted to get equity value?
EV = MV of equity + MV of debt - cash and ST investments
So to get MV of equity, it rearranges to EV - MV of debt + cash and ST investments
I wouldn’t necessarily call EV the firm value. If you discount FCFF by WACC you will get the total value of the firm. If you discount FCFE by the required rate of return on equity, you get the value of equity. EV is just a term used to approximate how much you would have to pay to acquire an entire company (buying its debt and equity at MV). If you were to acquire a company you would just subtract the amount of cash and short term investments from the total price because it doesn’t make any sense to pay cash to receive cash so the two just net out. EV is more like the price you’d pay to acquire it and firm value is the amount the company is worth, and the difference is cash & short term investments if that makes sense.