Hi all,

I am a bit confused on something regarding FCFF & FCFE.

There is a question in Schweser EOC (P167 , Q9)

It has asked to calculate the FCFE. The question before asked to calculate the FCFF.

Now, what I am confused about is, if you are to calculate the FCFE, I would apply the normal formula (CFO - FCInv- WCinv + Change Debt)

However, when this is applied to the question it gives you the answer C of 99.

The answer suggests that it is not 99 and that the answer must be calculated from FCFF Number calculated previously.

Why must we use FCFF to calculate FCFE? I know it is possible with another formula, but surely we should be able to calculate FCFE from the first principle just using the information in the vignette? (NI+ Dep+ Div - FC Inv - WC Inv + change in debt?) Surely the answer should be the same whichever way you take to get it?

Thanks