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@harsh444 said:
Left 8 marks because of time.I struggled with profit and capital measurements. Anyone got that?
I just think, the ROCE should reflect the primary objectives of the organisation, eg maximize the shareholder returns, therefore the Profit should be : Net Profit ( residual value available to shareholder) and Captial is Equity, the solely contribution from Shareholders, anyone think like me?
@manulik8 said:
Q1 Fair and time pressured, used APV.
Q2 FRA 4.25+0.5=4.75%
Futures 4.8%
Option 4.91 and do not remember.
Q3 was disaster !!!Mariam, as be advised by John, the FRA should be incorporates the credit spread already, therefore the FRA should be 4.25% only
I would be appreciated if you could share your email in my personal email: pnmphuong@gmail.com, so that i could send you the question and we finally could sort out the unclear issues, thanks
Dear John, the forum did not allow to attach any file, therefore I could not show the question, anyway, the principle of value the Real option is the Pa and P3 should be calculated base on Present value, is it right, as someone said the Pe should not be discounted as in the BSOP formula, the Pe x e is discounted already, pls. advise
Much thanksSorry Sir, the question be modified in the latest BPP revision book, I will copy the question when I back home
Sorry, It must be something i still do not understand, as in BPP book, in the example Four Season invest in Spain at investment 250M in 20 years with the cash inflow 254M, while the NPV is marginal, FS be offered an option to sales the project to Government at the end of year 5 at 150M, the Risk Free 7%, standard deviation 0.3
the value of the Put option based on BSOP is 4.7M
in conclusion, the Project shall bring to FS is 4+4.7=8.7M, so in this case, the NPV be added to derive the final value but not take a higher one, pls. advise
I means that in the real option : Put option, if the option value is higher than NPV without option, the higher value shall be added to business value, is it right ?
John,
May be you get me wrong as imean that i will calculate the irr or kd before tax, but in wacc, i muitiply the kd with (1-t), is that okI used the interest before tax flows, as i think i will calculate the kd before tax, is it ok
John, is it means that the option value of 60M including the NPV without option 50M already??
John,
Could you pls. advise another issues of the project real option relevant to this question
For a call option: if no BSOP the NPV of the follow-on product is 405k, if applying BSOP the value shall be 609k
why the answer did not add up two figure together to contribute the company but just 609k, and what the 405k represent
Thanksyes, sure we just use the historical data as a determinant to forecast the future only, anyway this question quite not clear, appreciate your clarification, John
thanks for clarification, however i’m still confused,how we know when we add the historical data like this in the business valuation calculation due to we often ignore the past data when value the acquiree, pls. clarify
So the APV just be justified whenever a significant debt finance be employed in a project? for example >50% debt finance if not the NPV could be used, pls
Thanks
Great !!
So we do not need to study any EVA question in P4 now, is it right, John?Dear John,
I would be appreciate should you could make it more clearer due to normally, the Credit Risk Premium depend on the Credit Rating of an individual Company, and the Premium are not affected by hedging, therefore the Lock in Rate should be adjusted by the rate, pls. advise
Much thanks
Although we know the future contract currency, however, which currency the gain/loss of future contract shall be settled, for example : the Contract size 120,000 Euro however, in the answer, the gain/loss of futures contract always settled in USD, if the futures holder is UK company and then they need to be converted this amount into pounds