FCFF calculation with CFO as starting point

Hi !

Can someone please explain why do we add Interest (1-Tax) while calculating FCFF with CFO as a starting point, considering the fact that we already add interest expense in CFO.

CFO includes a deduction for interest net of taxes. You’re undoing that deduction.

While calculating CFO, we add the interest paid. So my question is, if we have already added the interest while calculating CFO, why do we again add interest while calculating FCFF, with CFO as a starting point

What makes you think that?