In Yee case, there is this formula:

FCFE = NetIncome - (1-DR)(FCInv - Depreciation) - (1-DR)WCInv

DR is debt ratio

I thought that the following was correct:

FCFE = NetIncome + NCC -WCInv - FCinv + IncreaseDebt

Where did they get this formula from ?

I’m having the same issue. I thought no matter what formula you used for FCFF/FCFE the numbers would be the same. It seems to not be the case.

That formula is used when you are given a target capital structure and you are forecasting FCFE. This only applies to FCFE since changes in cap structure do no affect FCFF.

Thanks that s a great help, I kinda guessed that it was the case but I like to hear this from a fellow candidate at least I know what to do for sure now.