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@himayat said:
In question 2 in all three step forward future and option i divide how many number deduct please help meYou were supposed to multiply as the transaction was CHF and the rate was 1 CHF : 1.03 USD so therefore you multiply.
Don’t worry about it though, if you did all the following steps right, even with incorrect figures, you’ll probably only lose about 2 marks. We only need 50% of the marks 🙂
@stonecold said:
My APV was also 157m
Regarding first question, Tai was perpetuity but I think the combined was not as combined was growing at 4.2% after the 4th yearCombined value you needed to get the free cash flow for each of first 4 years. yeah 5+ was a growing perpetuity so needed to get this and discount at previous years discount rate and add the 5 amounts together for combined value. Multiply this by 60% for the equity value.
For the share offer it said Tai got 55.5% of synergy benefit and Chao 44.5%. Was that overall equity benefit or a per share benefit? I read it as overall equity. If that was Correct it was a lot better for Tai shareholders as they got more than half the benefit and a lot less shares to share it out between.
@niccpx said:
I calculated value of Tai co using free cash flow method, and deducted 400m debt (market value) to get value of equity of Tai co. And took this figure to divide by number of shares. Share price of Tai co is $3.80, if not mistakenI did the same though got a different answer.
The value if equity in Chao was simple, basically given. Share price given × no. of shares.
The value of equity in Tai was a FCFF and then take away the debt figure.
The combined company was a FCFF also but cash flows over a number if years and a deferred growing perpetuity. 60% is equity so this equity value.
For the share premium question the cash offers were pretty straight forward (I think).
The shareoffers were confusing and I’m sure I got them wrong but hopefully got a few marks along the way.
The mixed offer mentioned that the shares would be 2.60 after, so is this the value of Chao shareholder after? Seems to straight forward but it basically says this is the value. Tai value would be the 2.60 plus the cash offer per share, is this right?
It’s a pity we don’t get to keep the question sheets, I wouldn’t mind having a look.
in Q3 B – I was confused what they were asking about. I wrote about optimal capital structure and M&M theory mainly. Was that anyway relevant?
In Q3 A – There was no mention of capital allowances or depreciation (or else I missed it). Were we to assume there was some as investment reaidual value was a lot lower than investment. Also was this residual inflation adjusted.
Overall I found the exam ok ish but was sometimes I thought the information giving was ambiguous. Like Q1 said something like net assets and working capital were 23m, was that between them or each?