Forum Replies Created
- Posts
Question stated in the first section it was considering a 600m investment in Rupees. It gave the after tax inflows in the 3rd section.
With the swap (150m RR) if I recall reduced the investment so 450m was normal capital and 150m was the swap. The swap was then an inflow on year 4 exchanged at the current spot rate as the q stated to swap it back.
Yes Buryecs was very similar and a question from June 11
Q1 – unbundling
Valuation based on net assets valuation, FFCF valuation, PE ratio valuation, dividend valuation
with some WACC, ungearing and cost of capital involvedAll arrived at different values (pretty volatile)
Q2 – APV
Basecase NPV negative
APV negativeProject shouldn’t be undertaken based on it but it had strategic advantages
Q3 – hedging & foreign investment
Netting + Forward rates couldn’t be used because they had expired (3 month forwards given, receipt was in 4 months), only money markets were applicable way of hedging.
NPV without the swap negative
NPV with the swap positiveHi John
A small question on the above.
Why is it that the $128m is attributable to shareholders?
As the company’s capital split post acquisition is debt to equity 40:60 surely only 60% of the $128m is attributable to the shareholders and the remainder to debt holders.
Thanks in advance
Hi John,
Small question regarding the bank charge in Buryecs when considering the NPV of the project.
Why is the bank charge not considered as an annual outflow each year on the swap balance ($5000m)?
I understand the book value of the swap in EUR would change on this balance year on year but I’m not certain why it isn’t included within the project appraisal
i,e for year 1 I calculate at ($5000m * 0.5) = $2500m, $2500 * 0.6 = $1500 and then $1500 conversion into EURs i.e. in Year 1 would be an outflow of $1500*0.142 = 213 EUR outflow in year 1
Thanks in advance
