farrukhsadiq

I will take a stab at it..
I would venture to guess that since FCFF = NI + NCC + Int(1-t) - FCinv - WCinv that 2 things happen when you increase interest.
1) Int(1-t) increases by 60.
2) NI decreases by 60.
This offset would cause no change in FCFF.
For FCFE, you want to back out the interest cost, because this is truly not free cash flow available to an equity holder. (Interest cost is free cash flow available to the debt holder however, because they are the ones receiving the interest)