Pegasus2008

Sorry - may be it's just me but I was unable to understand your articulation the first time around.

So, in essence all that "[DR * (WCInv + FCInv - Dep)]" really means is it's taking the debt portion out - and if we substitute it for Net Borrowing in formula #1 we end up with formula #2 since 'total WCInv and FCInv' minus 'levered WCInv and FCInv' gives us equity portion of WCInv and FCInv - ok, now I think I get it. This brings me to the following question I posed earlier:

c) In formula #2, 'net borrowing' is not taken into account since debt is not part of the equity forecast

Technically, this statement is false - however, there is a reason why they restated the equation to formula #2 as they did - and that is probability related to the fact that they are unable to predict the extent of their borrowings and outflow of interest way into the future (even though *assumed* target capital structure exists)? If not, what is the reason behind restating the forecast equation to formula #2?