OpenTuition.com Free Accountancy Education
Free ACCA lectures and course notes | ACCA AAT FIA resources and forums | ACCA Global Community
Once again, Great lecture!….but, what is that alternative?
I’m not sure about one thing…In Example 11 the asset beta equals to 1.57, equity beta is 1.80. What about the difference of 0.23? What does it represent if we assume that debt beta is 0?
Gearing makes the shares more risky and therefore the equity (share) beta is greater than the asset beta (which is the risk if there was no gearing). The fact that we assume the debt beta to be zero is irrelevant in that more gearing will always make a share more risky.
There is no special significance attaching to the difference of 0.23.
the lecture is great but i wonder why we don’t consider tax effect on culculating wacc? why not culculate wacc as:[ve/(ve+vd)]*ke+[ve/(ve+vd)]*0.75*6%?
@bunnywong1986, oh sorry i see, 6% is after tax relief
Awesome explanation !!
HELP! I can’t see the rest of the ecture. It stops at around 21mins, after (Ke) for part b of the question
This lecture has clarified most of the errors that I was making on this topic.
Thank you. I hope I will not repeat the same mistakes during exams.
You must be logged in to post a comment.
December 2012 ACCA Exams - Genius Hunt Competition Results
OpenTuition.com Site Map
Free ACCA P1 lectures
Return to top of page
Copyright © 2013 · Privacy and Cookies · Advertising · Recommend this site · Contact us · Sitemap · Log in