Calculate Free Cash Flow to Equity
After-tax income differs from free cash flow to equity (FCFE) because after-tax income is an accrual accounting concept (i.e., after-tax income includes non-cash items like depreciation and amortization) and does not exclude any additional investments (i.e., capital expenditures and increases in working capital) necessary to maintain the firm's operations and grow the firm based on its projections. Given a firm's after-tax income (after_tax_income
), Depreciation/Amortization (depn_amort
), capital expenditures (capex
), and increases in working capital (incr_wc
), calculate the free cash flow to equity. All objects in parentheses are stored in memory and are for years 2017 through 2021.
This exercise is part of the course
Equity Valuation in R
Exercise instructions
- Calculate Free Cash Flow to Equity.
Hands-on interactive exercise
Have a go at this exercise by completing this sample code.
# Calculate FCFE
fcfe <- ___
fcfe