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May i know if the tax adjusted gearing is examinable? it says the formula is shown in the formula sheet but i cant find it.
and the equity of jupiter 29m how do we get this 29m?
total market value means equity only or debt + equity?
This question was set by the previous examiner who did write his answers sometimes in very strange ways!!!
You do not need to mention ‘ tax adjusted gearing ‘ and there is no formula for this on the formula sheet.
What he is actually doing is using the asset beta formula (which is on the formula sheet). What he calls tax adjusted gearing is simply calculating one bit of the formula first.
You certainly can be asked to ungear and regear betas but all you need for this is the asset beta formula.
The 29M should actually be 290M (you are told in the question that there are 50M shares with a market value of 580c
The total market value is usually equity + debt, but do read carefully the context in which it is mentioned.
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