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Forums › ACCA Forums › ACCA AFM Advanced Financial Management Forums › Chapter 16 example 2 – expected cash flow of combined company calculation
In Chapter 16, example 2, where we have to calculate market value of the new company – it will be the expected cash flow of combined company discounted at WACC.
Whe we calculate the expected cash flow we have to sum cash flows of two given companies, add synergy effect and decrease it on annual interest payments net of tax (our case – $80M*5%*70% = $2,8 per annum)? if yes, then why in the answer it lloks like they decrease each year cash flow sum + synergy on $3 instead of $2,8? due to rounding or i’m totally incorrect in arriving to combined cash flow amount?
nobody know at all?