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Chrysos Co

This topic has 3 replies, 2 voices, and was last updated 6 years ago by John Moffat.

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September 5, 2018 at 6:16 am #471483
aaradhya33
Member
- Topics: 16
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Sir,
how is the cost of equity calculated in this question?
I didnt understand the .2/.8 part in ke calculation
September 5, 2018 at 7:02 am #471504
John Moffat
Keymaster
- Topics: 57
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The answer has used the MM Proposition 2 formula (from the formula sheet), and the 0.2/0.8 is Vd/Ve
September 5, 2018 at 7:19 am #471511
aaradhya33
Member
- Topics: 16
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Thankyou very much sir.
I have another question regarding Chrysos.
Why is just the bank overdraft deducted from the value of the equity and not other liabilities?
Is it so because it is mentioned they are converted(VCO bond) and repaid?
September 5, 2018 at 2:20 pm #471587
John Moffat
Keymaster
- Topics: 57
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Yes – that is the reason 🙂
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