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When I was writing SBR anytime I copy a sentence from the exhibits to the answer sheet the format changes completely(the font size becomes very tiny). So I couldn’t make use of the copy and paste format since it appeared unprofessional on my answer sheet.
However, when copying the questions from the requirement sheet to the answer sheet it was always in their original format. The only problem was from the exhibits to the answer sheet.
I will be writing my next paper AAA this week and I wanted to know if there is a way around this issueThe NPV and APV qn.
Do u remember the marks allocated?
And the VAR qn what was the marks allocated.
Do u rememberHello,
Please , I don’t understand why Keshi should choose fixed over floating rate since Keshi is anticipating interest rate to increase or decrease by 0.5%.
They are expecting to borrow so they’re hedging against a rising interest rate. So
at worst if interest rate increases it’ll be 4.3% (3.80%+0.50%) which is better than 5.04%. But if Keshi chooses Variable rate it is L-0.06% , that is whatever LIBOR rate is Keshi will go below LIBOR by 60 basis point. And they’re anticipating LIBOR to only increase by 0.50% to 4.3%( Less than 5.04%). And the question doesn’t tell Keshi prefers Fixed.
I’m a little confused.When calculating for the present value of Tax shield and subsidy benefit on a loan does one has to add the issue cost of the loan to the amount of loan.
Eg: Issue cost= $2.4m
Amount of loan= $ 50 m
Normal borrowing rate 10% for 4 yrs
Tax @ 30%Answer:
1. PV of Tax Shield =10%*50m*0.30*(3.170-0.909)2. PV if Tax Shield= 10%*(50m+2.4m)*0.30*(3.170-0.909)
Kaplan used the 2nd formula in their study textbook.
In Kaplan AFM textbook, the issue cost was added to the amount to be raised when calculating the Tax Shield on the loan and the Subsidy Benefit but upon solving the past questions I’ve seen they don’t add the issue cost to the amount of loan when solving for the PV of tax shield and subsidy benefit.
Can someone please help me.When calculating for the present value of Tax shield and subsidy benefit on a loan does one has to add the issue cost of the loan to the amount of loan.
Eg: Issue cost= $2.4m
Amount of loan= $ 50 m
Normal borrowing rate 10% for 4 yrs
Tax @ 30%Answer:
1. PV of Tax Shield =10%*50m*0.30*(3.170-0.909)2. PV if Tax Shield= 10%*(50m+2.4m)*0.30*(3.170-0.909)
Kaplan used the 2nd formula in their study textbook.
In Kaplan AFM textbook, the issue cost was added to the amount to be raised when calculating the Tax Shield on the loan and the Subsidy Benefit but upon solving the past questions I’ve seen they don’t add the issue cost to the amount of loan when solving for the PV of tax shield and subsidy benefit.
Can someone please help me.And is the OT videos on SBR updated since Accounting standards are updated frequently
Can one pass SBR solely by using OT videos alongside Study kits and past questions
