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Intial investment sh500000 expected cashflow every year 200000 risk5% market premium 9%,the firm has indifferent cashflow between a certain sum sh181347.expected cashflow at the end of 5th year sh 200000 beta factor is 1.2 and ksh=Rf+(Rm-Rf)beta . required (1)npv using constants sum (2)npv using risk adjustment rate
There is no point in simply typing out a full question and expecting to be provided with a full answer.
Unless you have been given this as a test question (in which case we do not do your homework for you 🙂 ) you must have an answer in the same book in which you found the question. So ask whatever it is in the answer that you are not clear about and then I will explain.Part (1) of the requirements is not askable in either Paper FM or Paper AFM. Part (2) can certainly be asked in Paper FM and is not ‘advanced’ financial management.
This is all explained in my free Paper FM lectures. The lectures are a complete free course for Paper FM and cover everything needed to be able to pass the exam well.
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