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Hi sir.
I have started the revision kit and got a confusion …. how will we calculate the discount rate for NPV calculation and then for APV …. can u please tell me in simplified way..What my understand is after the lectures that to calculate discount rate for NPV we use CAPM but for APV is all confusing..
Sir your lectures are really helpful and motivating but coming towards kit is all bad again.. 🙁
Further for TAMPEM INC dec 06 …. why hav they used beta asset of 0.882 when they can regear it … as gearing after investment will change to 60% equity and 40% debt……
For NPV’s we use the WACC (and CAPM is needed to calculate the cost of equity).
For APV’s we discount at the cost of equity if it were all equity financed (which probably needs using CAPM)
Thank you sir…
So it means always for APN we hve to use only beta asset… and compute Ke..Sir but when do we use the regeared equity beta. At what time or how will we knw that now we have to regear the beta ..
Thanks alot sir .. u are a big support 🙂
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