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The video “Pensions (IAS 19) – Introduction” does not match page 51 of the notes. The first screen on the video discusses “Scope of IAS 19 Employee Benefits” and later it shows a diagram of “Defined contribution pension scheme” but I can’t seem to follow where it is in the notes.
The next video “Pensions (IAS 19) – Example” continues from page 52 of the notes.
Hi John
Value created from combined company
($126·56m + 0·5 x $23·0m x 0·8 + $7m) x 10·35 = $1,477·57Where does the 0.5 figure above come from?
Thanks.
Hi
When calculating the premium (cents per €), where does the 0.028 and 0.023 figures come from?
Exercise Price: $1·36/€1
Premium payable = 117 x 0·0280 x 125,000 = US$409,500Exercise Price: $1·38/€1
Premium payable = 115 x 0·0223 x 125,000 = US$320,563Thanks
Hi John, I don’t understand where the 0.03 growth for fodder, and 0.029 growth for the combined entity, figures come from in the solution below.
Thanks, MeabhFodder Co cash flow and value computation ($000)
Year 1 2 3 4
Sales revenue 17,115 18,142 19,231 20,385
Operating profit 5,477 5,805 6,154 6,523
Less tax (28%) (1,534) (1,625) (1,723) (1,826)
Less additional investment (22c/$1 of sales revenue increase)
(213) (226) (240) (254)
Free cash flows 3,730 3,954 4,191 4,443
PV (13%) 3,301 3,097 2,905 2,725
$(000)
PV (first 4 years) 12,028
PV (after 4 years) [4,443 x 1·03/(0·13 – 0·03)] x 1·13–4 28,067
Firm value 40,095Combined Co cash flow and value computation ($000)
Sales revenue growth rate = 5·8%, operating profit margin = 30% of sales revenue
Year 1 2 3 4
Sales revenue 51,952 54,965 58,153 61,526
Operating profit 15,586 16,490 17,446 18,458
Less tax (28%) (4,364) (4,617) (4,885) (5,168)
Less additional investment (18c/$1 of sales revenue increase)
(513) (542) (574) (607)
Free cash flows 10,709 11,331 11,987 12,683
PV (9%) 9,825 9,537 9,256 8,985
$(000)
PV (first 4 years) 37,603
PV (after 4 years) [12,683 x 1·029/(0·09 – 0·029)] x 1·09–4 151,566
Firm value 189,169