[dve1]

mainai92 wrote:

dve1 wrote:

mainai92 wrote:

dve1 wrote:

michaelrhys89 wrote:When working out the cost of equity – is CAPM alone the cost of equity?

I’m not sure, maybe we calculated equity and debt differently for the proxy company. It was a pretty tricky paper

[dve1]

mainai92 wrote:dve1 wrote:
michaelrhys89 wrote:When working out the cost of equity – is CAPM alone the cost of equity?

Did you use the 1.25 beta or 2.3 beta to degear the beta?

[dve1]

michaelrhys89 wrote:When working out the cost of equity – is CAPM alone the cost of equity?

Think you needed to work out the market values of equity and debt to find the project specific cost of equity

[dve1]

To find the sales volume sensitivity you need to discount sales – discount VC and account for tax. This is because sensitivity is NPV / Present Value of variables. Well that’s what it says in my notes anyway, I could be wrong

[dve1]

CHERYLLOVATT wrote:No I did not. ? maybe I’ll get one mark for knowing the formula….haha

I think the subsidy was before tax not sales but who knows

[dve1]

Manakiwala wrote:

dve1 wrote:The NPV and Sensitivity was pretty tricky. I got 11.75% for the sales volume sensitivity. Idk if this is right though

NPV was 8 and sensitivity was 4 with the written bit being 8 marks

[dve1]

CHERYLLOVATT wrote:I took my capm and multiplied them by the market value of equity for the cost of equity in $. I did a wacc also just for the sake of it as I got a bit confused but came back to it and fixed it. Sensitivity analysis is took the npv over the contribution and got 10.28 or something around that. Section b wasn’t great for me.
Can anyone remember the npv for the project in sections c question a?

Did you discount and account for tax in your contribution?

[dve1]

The NPV and Sensitivity was pretty tricky. I got 11.75% for the sales volume sensitivity. Idk if this is right though

[dve1]

I got 17.8 and 10.90 for my cost of equity

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