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Also Sir we are asked about if the option is not exercised then what will be the outcome?
in the model answer they have done it like this12,692,225 = 12,250,000x – 105,350
12,250,000x = 12,692,225 + 105,350
so that x is US$1·0447 = CHF1.Or
12,688,550 = 12,250,000x – 105,350
12,250,000x = 12,688,550 + 105,350
so that x is US$1·0444 = CHF1.from where that US $ 1.0447, and US$1·0444 came from?
I guess when the Free cash flows are discounted with growth incorporated then we get Market Value of Equity
Sir why is the Subsidy benefit like this
Benefit = $30,600,000 x (0·05 – 0·022) x 3·546 = $3,038,000
it should be like this 30,600,000*0.3%*3.546=$325522.8
as a matter of fact, would it be acceptable if it was like this as below?
$30,600,000×0.3%=91800
but we will forgone tax savings so 91800*0.30=(27,540)
Total 64,260
A.F5% 3.377=217006
I guess in my workings i have done it in a combined approach and then mutlplied with aan annuity factor while in the model answer they have first done subsidy benefit seperatly and multiplied by A.F and then they have done tax relief lost and multiplied it seperatly and then combined it
Sir another Question is that why we are using the annuity factor of year 2-5 all we need is year1to 4 annuity factor i guess thats to do with the 1 year delay of tax payment
Can you pass this to the ACCA ..I mean you want to test our Knowledge about Accountancy whats that to do with time…??If you give 1 hour more what difference does it make to the testing of an individual..The exam was so time pressured
Sir My Next Question is Regarding the Exchange rate it is quoted as dollar/pound
but if we look at futures it is given in pounds/dollars
now in order to calculate the basis can we use the spot rate of 1.5510 or we have to reciprocal it??
Bpp kit have done it like this 1.55275(Future Price)-1.5510(Spot)=0.0235
Sir please advice
Also sir No of contracts will be like this??
=20 millioneuros/0.8656euro/$125000
=185 contractsis it correct sir?
Sir i am confused ,we think according to contract currency which is $, so in the near future i am selling euros to buy dollars right??? so we enter into “buy $ June futures but sir if we look at march futures and june futures its currency is euro so how can we enter into a “buy $ future”?
Hi Respected Teacher, my question is about the months of the basis calculation as today is 1 march 2016
so Today at transaction date end of future
1 march 2016 31 may 2016 31 june 2016future 0.856
spot 0.8638
=2/4 *0.0018
but teacher they have done 2/3 *0.0018
can you please explain this?
whats the formula used to calculate cost of capital in part (b) black sholes bit of the question
Hi John , How is pa value calculated that is 30613600 in Present value of the underlying asset they have said that it is the pv of cflows forgone in year 3 4 5 can you spot me the figures of year 3 4 5 which adds up to 30613600??
9600 * 22 percent= 2112 but no idea how these other figures of 1722, 1316 came
In this question Spot rate is not given through which we can compare exercise price and then decide for whether we exercise option or not? as in your lectures and notes in example 3 spot rates were given so then we exercised option and calculated the “Claim”
Please tell what we will do as in kit their is 700 and 1400, I know how they calculated it but i am not clear about the logic behind it..Thanks
