In CFAI Volume 4 page 435 problem 6… In the answer key on page 450-451 it says to use the formula for FCFE (with the 1-DR etc), but why are they adding back WCInv when the formula says to subtract… NI - [(1-DR) * FCInv - dep)] - [(1-DR)*WCInv] What am I missing here?
simplify your formula it becomes NI-{(1-DR)[FcInv-Dep+WcInv]}
CP - you’re a genius. When I grow up, I want to be just like you
Actually, in the original formula, it is clear that WC [adjusted for equity portion] is being subtracted.
I don’t have the book in front of me, but is WC negative in this case? This question has an errata in relation to the fifth bullet, maybe this is another typo.