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