tianxin

They did a flip flop on you.

For discounting FCFF, WACC should be used because net borrowings is taken into account therefore the cost of capital should include what is required from the debt. WACC is also lower because you have the advantage of a tax shield

For discounting FCFE, return on equity is used because that is all that remains since you took out net borrowings.


Flip flopping them will overstate one and understate the other.