Forecasting FCFF and FCFE

CFA Level II
#1

Hi. I’m having trouble understanding this:

Net borrowing = DR(FCInv - Dep) + DR(WCInv)

…

#2

The firm will finance Capex and WCInv with a mix of debt and equity, use that formula to calculate how much comes from debt

#3

^ That’s right.

DR is the the company’s target debt ratio.

#4

thanks guys