In general we highly discourage the use of FCFE. See our valuation questions on the Ask the WST Expert link. You should always use levered beta to calc cost of equity. When using comps' beta, you first unlever beta then re-lever at target capital structure. Thus its a "normalized" levered industry b... In general we highly discourage the use of FCFE. See our valuation questions on the Ask the WST Expert link. You should always use levered beta to calc cost of equity. When using comps' beta, you first unlever beta then re-lever at target capital structure. Thus its a "normalized" levered industry beta. See our Finance 101 class in which we explain in great detail the actual mechanics. Also, we have some q&a on this topics on the Expert page. Read More

With respect to the use of FCFE, I would also normally avoid using it; however, would it make sense in a situation where a company is expecting to fund a substantial capex program with debt financing and use anticipated cash flows to pay it down quickly?

*maybe* depends on what you are trying to do - value a company? Or what?