1. avatar says

    Yeah John! I remember waac formulae was at 2 places in investment appraisal questions. 1 was just easy formuale, the other time it was added with capm( project-specific cost)…!

    • Profile photo of John Moffat says

      Not quite. There is only one way of calculating the WACC.
      The calculation of the cost of equity can be in two ways – using the dividend growth model or using the capital asset pricing model (depending on the information given) – both are covered in our Course Notes and lectures.

  2. avatar says

    Dear John,

    In example 10 of chapter 17 of OT notes – IRR= 5%+12.59/25.06*5%
    I’m bit confused because we first discounted at10% and then we guessed d.f @ 5% because of negative NPV at 10%, comparing this against example 8 shouldn’t IRR be 10%+12.59/25.06*5%

    I’m not sure why you’ve used 5% instead of 10%. Please explain

    Looking forward to your reply.



  3. avatar says

    Dear Sir John Moffart,

    You just make things so simple that i now have confidence in mastering this subject. I like it when, in your humour, you pick on Peter, Valentino, Andrea and ‘Hello, Hello’ for lagging in their attention (smiling…) Your lectures are just soooo joyful and beneficial to hear and watch.

    You are indeed a gem and a great asset to producing future generations of capable accountants!
    Please continue with your antics and style of lecturing. They are very effective and I just love them…..

  4. avatar says

    5% Preference shares ($1 nominal value) 10

    the ex-dividend market value of the preference
    shares is $6·25 million

    what will be the cost of preference shares ????????
    thank you

    • Profile photo of John Moffat says

      It depends whether or not the overdraft is intended to be long term.

      If not long term then it should not be included.

      If it is intended to be long term then it should be included (remembering that the cost is the interest less tax relief).

      Usually the examiner makes it clear as to whether or not it is intended to be long term. If he does not make it clear then he accepts it included or not included (even though the WACC may be different). Just check as to whether or not he make it clear, and if he does not then state your assumption.

  5. Profile photo of manonaseriousmission says

    Honestly, what is it with tutors on opentuition (John Moffat especially) that once they handle topics on ACCA, cloudy areas just become clear and dreaded subject areas become a piece of cake? They just ace it when they explain topics… Really, other tutors (who think they know stuff but don’t) should learn from these great OT tutors…they’re simply awesome! Common guys we need to canvass for an award for ‘em..Not being patronising, just truly grateful :)

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