The equity is worth $1,400 million.
Now,letustrytovaluethemseparately,beginningwiththe
noncash investments.
To this, wecan add thevalueof thecash, which is $200
million, to get a value for the equity of $1,400 million.
To see the potential for problems with the consolidated
approach,notethatifwehaddiscountedthetotalFCFEof
$129millionatthecostofequityof10%(whichreflectsonly
the operating assets), we would have valued the firm at
$1,290 million. Theloss in value of $110 million canbe
traced to the mishandling of cash.