[aripmira]

@w01122 said:
Does anyone remember what they got for the APV? All i remember was that the financing impact had a big positive effect for my base case NPV calculation. I assume I went wrong somewhere, but couldn’t figure it out.

How did you treat the tax relief for the bank loan? The question said that the loan is paid back evenly over the 4 years, so did you deduct the repayment per year, and then calculate interest and tax relief of the netted amount?

I thought b) was quite weirdly worded, still not really sure what they were asking

I have got NPV about negative 5 mln,
Tax relief for bank loan I did separately for 4 years, and yes, with deducting the repayments. Actually by using the annuity factor.
Then I applied df 4% (as risk free, was given). The tax 30% on the summary of 4 discounted numbers

For subsidized loan, apart from the tax relief on 3.1%, I additionally calculated tax relief on the difference of (rfr 4% – 3.1%)

[aripmira]

@jmmyjimmy said:
i understand the futures were in chf, so that we need to sell futures in order to get rid of chf (i.e. buy usd).

according to this logic, we were to buy put options (june ones).

Hello,
I defined as call option as we had to buy $. But now I see that I was wrong, the future contract was in CHF, so we had to sell CHF…. Oh, pity

[aripmira]

@bejkaad said:
I have put June Put options as well, 98 contracts.

Q3. How have you used the asset beta. What was the discount factor to use for calculations? This has confused me. In the question was mentioned that company has mixture of debt and equity, but no further info only that project is financed fully by debt.

Hi,
for Q3 I found out the Ke = Rf+b*(Rf-Rm). This Ke I used then as a discount factor for the NPV. Afterwards, separately I calculated the tax shield for both loans and loan issue costs

So that we receive the APV. I guess I was correct?

[aripmira]

Hi!

In the hedging with futures market we were to receive the CHF amount of money.
The size of contract was also in CHF 125000 or something like that.
My question is: In order to define the number of contracts did we suppose the receipt of CHF mln. to divide to the contract size?
Or first convert the amount into $ with today spot rate, and afterwards to convert to CHF by using the future rate?

Thanks

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