Hey guys, hope everyone is having a nice saturday…
I want some clarification and also realized that i remember things when i post on here.
For FCFE, or for any other types of equity quesitons where you need to find Terminal Value.
Do you guys take the value a year forward to find the terminal value?
Example:
A question gives you 3 periods. Period 1 = 2 years. Period 2 = 5 years. Period 3 = stable growth.
To find the terminal vlaue. You need to find the FCFE of year 8. Then divide by r-g.
I think im getting a bit confused, cause in year 8, you need to do the either EPS - (1-Debt ratio) (Capex-Dep)… formula. Where at one point i was about to do FCFE of year 7 * 1.05 (growth rate) to get FCFE for year 8. This would work for dividends, but not for FCFE!
This forecasting FCFE is not very entertaining… Thanks