ACCA F9 Question 4 March June 2016 hybrid exam

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1. adaacca says

   April 17, 2023 at 4:08 pm

   Sir! where is 4 coming from? 4*23000*4.26. Thanks

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   • John Moffat says

     April 18, 2023 at 8:13 am

     The shares have a nominal value of $0.25 so the number of shares is 23,000 / 0.25 (which is the same as 4 x 23,000).

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2. glodan123 says

   May 31, 2017 at 8:12 am

   Good morning Sir,
   I am wondering why you used 5% and not 6% interest given for the loan notes in the PV table for both annuity and PV ..thanks in advance

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   • John Moffat says

     May 31, 2017 at 8:53 am

     The coupon rate is 6% and I have used 6% (less tax) to get the interest flows.

     The cost of redeemable debt is always the IRR of the flows. As always for the IRR we need two ‘guesses’ and I have used 5% and 10%. However, again as always with the IRR, any two ‘guesses’ will do.

     I really do suggest that you watch my free lectures on the cost of capital. Calculating the cost of redeemable debt is always in the exam!!!

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     • glodan123 says

       May 31, 2017 at 3:13 pm

       thanks a lot sir.

     • John Moffat says

       May 31, 2017 at 5:15 pm

       You are welcome 🙂