Will firm pay dividend influencing FCFE? Similiar case like Net borrowing can increase FCFE (borrow the money from debt holder)
However, understand from the formula the answer is no, but why…
I’m not sure I understand your question
No.
It’s a use of FCFE.
Thanks! So FEFE/FCFF is a cash-generating approach?
It’s Free Cashflow.
It’s the cash available to the providers of capital/equity after all necessary expenditures.
Dividends do not affect FCFF and FCFE because it’s an usage (whether you use it or not, the cash will be available regardless).
FCFE is the cash generated by the firm less it’s debt financing costs. FCFE can be used to re-invest in the business (increase g long term) or to pay out as divididend. As the above poster noted, the dividend payment comes out of FCFE and is not an input to FCFE. Dividend payouts do not influencen FCFE.