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ACCA F9 Revision Download F9 Question Paper
August 25, 2018 at 4:11 pm
why 1070 is discounted for one year instead of 7 years.
John Moffat says
August 26, 2018 at 6:41 am
To go from an amount at time 8 to an amount at time 7
August 20, 2017 at 5:35 pm
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May 20, 2017 at 1:22 pm
The 7% interest on nominal of $1000 loan note & cost of debt on CL Notes 8%… from the company’s point of view, what’s the diff?.. both are cost’s
Sorry sir, a bit messed in my head up after reaching the finishing line.
May 20, 2017 at 7:26 pm
They are both costs to the company, but that is irrelevant to the question.
They question asks for the market value, and it is the investors who determine the market value – not the company. The market value is the present value of the future receipts discounted at the investors required rate of return.
I do suggest that you watch my free lectures – they are a complete free course for Paper F9 and cover everything needed to be able to pass the exam well.
March 8, 2017 at 7:13 pm
Here when deciding on the assumption of whether they will convert or redeem, why do we not take interest receipts into consideration ?
I mean we only consider value of shares receipts or redemption value, but future interest receipts for 7 years is not considered.
Is it ignored because it would be equal whichever way it is, either conversion or redemption, it would be a receipt of 490 (70*7 years) ?
March 9, 2017 at 7:50 am
The decision to convert or take cash will not be made until 7 year from now, and they will have already received the interest for those 7 year. We are simply calculating what decision we expect they will make in 7 years time.
Have you watched the free lectures on convertible debt?
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