There are 200,000 shares. The MV is $2.40 per share. Therefore the total market value if 200,000 x $2.40 = $480,000. The nominal value is of no relevance. (Have you watched the free lectures on the calculation of the WACC?)

Sir there is an issue with the question 3 answer. The annuity df for 5 yrs is 3.791, not 3.761 as you stated in a previous comment. The npv @10% is $ -4.847 .The irr will come to 12.89%

I assume that you are referring to my comment from 2017. There was indeed a mistake in my comment and I have now corrected it. The IRR is not 12.89% however. It is 11.45%.

adaacca says

QN5. the issued share is supposed to be. 200,000/0.5= 400,000.

Help me to understand. Sir

John Moffat says

$0.50 is the nominal (par) value per share.That is not the market value, which is $2.40 per share.

The question says that there are 200,000 shares.

yogi@2005 says

shouldn’t the market value be (200,000/0.50)*$2.40 ? why did’t you consider nominal value

John Moffat says

There are 200,000 shares. The MV is $2.40 per share. Therefore the total market value if 200,000 x $2.40 = $480,000. The nominal value is of no relevance.

(Have you watched the free lectures on the calculation of the WACC?)

davidvdo says

Hi sir, where does the 7 per annum in q3 come from?

John Moffat says

The coupon rate is 10%, there is tax at 30%, so the net interest cost to the company on $100 nominal is 70% x 10 = 7 per year.

Did you watch the free lectures on this before attempting the test?

joenamakhwa says

Nice Test

John Moffat says

🙂

naveedicaew says

Sir i am not getting 5 percent growth rate in question 2. Kindly help. When i take root (36/33.1)^.3333 i get different answer.

John Moffat says

I don’t know where you are getting 33.1 from.

It should be (36/31.1)^0.33333 – 1 = 0.05 (or 5%)

kaydeah says

sir in question 3 ,

I don’t get why we multiply 36 by 1.05

why do we not just divide 36 by 540 and then add the 0.05

kaydeah says

sorry i meant question2

John Moffat says

Because that is what the formula provided on the formula sheet requires!! Did you not watch the free lectures first?

Fuad says

Sir there is an issue with the question 3 answer. The annuity df for 5 yrs is 3.791, not 3.761 as you stated in a previous comment. The npv @10% is $ -4.847 .The irr will come to 12.89%

Fuad says

The npv @10% is *$ + 4.847

John Moffat says

I assume that you are referring to my comment from 2017. There was indeed a mistake in my comment and I have now corrected it. The IRR is not 12.89% however. It is 11.45%.