FCFE valuation using the one stage perpetuity model

Hello,

So I know that to value a firm’s equity based upon a one stage FCFE model, we must incorporate the growth of cash flows into the formula.

Does this growth of cash flows represent the growth of cash flows related to investments from equity holder/bond holders, or both?

That growth rate you tell is related to the growth of cash flows to equity holders only.

The growth rate related to FCFF applies to the cash flows to equity holders and debt holders at the same time. That’s why we talk about The Firm in this case.