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Sir, one quick question!
With the information that is given, is it possible to calculate the value created/ additional value for the other shareholders other than VCOs?
Thank you in advance for your kind explanation!
Another one more question!
It was said that, the CF of the manufacturing business unit will only increase by 8% in the first year and then it remains static for the foreseeable future. So therefore, we didn’t incorporate the growth rate as the denominator into the formula to calculate the value of the manufacturing division.
But let say just for the sake of argument, if the the CF were to grow by 8% for the next 4 years and then it remains constant for the foreseeable future. Then how do we compute the value of the manufacturing division,
Should we incorporate the growth rate into the formula as the denominator?
Should we discount the CF at the Y4 discount rate of 10%?If it were to grow by 8% in the next 4 years then you would have to calculate the amount in each of the four years and discount each of them separately. Then you would add on the PV of the flows from time 5 onwards discount them as a normal perpetuity given that the were then constant.
Hi teacher
I want to ask two questions related to 2017 March Q1,”
the estimate of Chrysos Co’s value to the equity holder after undertaking the restructuring programme.”
The first question is
As can be seen in the appendix 3. When estimating the cash flows, this question didn’t deduct the additional investment $1200 million from the cash flow. This question only considers its influence on deprecation.
I want to ask why the whole amount 1200 million are not allowed to be deducted as the additional investment when estimation the cash flow.The second question is:
The unbundling value of 3289 million which through MBO has not be included in the ” value to shareholder”. I want to ask why we are not allowed to include this amount into value to equity holder.
That is because in question (2015 December Q1 Cigno) and (2020 March Westparley), we include the sell- off value and unbundling value when calculating the value to shareholders.Thank you so much
This is not project appraisal where the initial investment would be subtracted in arriving at the NPV. It is calculating the value of the business after doing the investment and the value is the present value of the expected future flows.
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