Forums › Ask ACCA Tutor Forums › Ask the Tutor ACCA AFM Exams › june 13 (1)
- This topic has 3 replies, 2 voices, and was last updated 8 years ago by John Moffat.
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- May 23, 2015 at 7:39 am #248041
Sir is not finding the perpetuity the same formula as finding value of company. I mean
FCF (1+g)/ke-g. Then we discount again.
I can calculate value of company before taking Bahari project. But while calculating after bahari project if i put ke as 11% and growth as 15% it will become – am i taking some wrong figure pls clearify.In solution after taking the bahari project it is showing diff way i mean taking annuity for 10 yrs can u please show me the same way the value after taking bahari project,the way they have shown taking before bahari project. ThanksMay 23, 2015 at 9:00 am #248084You are correct about the formula for a perpetuity.
However the Bahari project is not a perpetuity. It will only last 15 years – the flows for the first 5 years the flows are detailed in the question, and then the following 10 years are an annuity because it says that they flows will stay at the year 5 level.
May 23, 2015 at 11:10 am #248115Thank u sir.
May 23, 2015 at 2:09 pm #248157You are welcome 🙂
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