Analyze_This

Thanks for the detailed explanation.

Just so that I understand what you are trying to say: formula #2 fully reflects formula #1 given we implicitly reword formula #2 by slightly adjusting for Net Borrowing?

If so, then the above formula #2 now becomes:

FCFE = NI - [DR * (WCInv + FCInv - Dep)]

Is this correct?

If so, what happens to the cost of WCInv and FCInv - which we originally negated from NI in formula #1?

Note that I didn't think you meant to add the Net Borrowing adjustment to the original formula #2 - that would completely throw it off.