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Hello, Sir,
My question is why not subtract the interest of 7% unsecured bond to calculate FCFE, Like according to the formula ,FCFE=FCFF-Intrest(1-t)+net borrowing. The examiner answers say FCF , than he uses growth model to calculate value for company and subtracts debt to calculate FCFE.
Thank-you
Hello Sir,
I get very confused on the basis calculations as such.
For the Polytot question.
I used 1.5475 as the spot and subtracted december futures of 1.5275 from it to get the ticks now i used 2/6 as unexpired basis and the result was 0.0067, i added this back to the future rate to get the new future rate which came out to be 1.5342, i used this rate to calculate the no of contracts.
I get confused when i see the solution , when the examiner uses either the forwards rate or the 2 future rates as the method of interpolation to calculate the future rate.
Thankyou.