when they ask you to find a stock price, know that you need to use DCF the 2 types of DCF are essentially DDM and FCF-based DDM = div/r-g and FCF based is finding FCFE and discounting at either WACC or Ke (Ke is firm has 0 debt) also: most of the time, they’ll make you find Ke or WACC first, so if you have to use the CAPM to get Ke, REMEMBER to find the REAL risk free rate ----> RRFR = (1 + r) (1 + i) - 1 Hope that helps.

daj, I am using schweser and they do not go into using FCFE, however I ran into on a sample exam and had no idea how to work it out. Can you possibly go through an example? Thanks boss!

getterdone Wrote: ------------------------------------------------------- > daj, > > I am using schweser and they do not go into using > FCFE, however I ran into on a sample exam and had > no idea how to work it out. > > Can you possibly go through an example? Thanks > boss! I think FCFE is CFO - cap X + net borrowing I only have econ and quant books with me. sorry!

its all good thanks anyway!