[Nercia@1234]

Thank you so much for your patience. I understand it now.

[Nercia@1234]

But how do I calculate IRR if I don’t have market value for Dentro.

Market value was only provided for Sigra the acquirer

This is confusing for me like how do I input the information on excel if I don’t have information like the market value
How will be able to have the PV

[Nercia@1234]

But in this case we neither have the market value nor the required rate

So if I use a different r
Let’s say I use 5% and 10%
Do I still have the same Market Value as the one they got when they used 5% and 4%

[Nercia@1234]

Okay thanks

[Nercia@1234]

Thank you . I understand now .

[Nercia@1234]

Thank you for the clarification Mr John

[Nercia@1234]

Thank you sir

[Nercia@1234]

Thank you so much.

[Nercia@1234]

I have watched your lectures.
Thank you.

[Nercia@1234]

Okay thank you

[Nercia@1234]

Okay thanks

[Nercia@1234]

Thank you ? ..
I have listened to all your videos
it’s just that with the pressure of the exam preparation I tend to forget.

[Nercia@1234]

is this for free

[Nercia@1234]

Thank you so much your explanation was quite helpful

[Nercia@1234]

Okay thank you

[Nercia@1234]

Thank you so much..

[Nercia@1234]

Okay thank you …
I found it in the Kaplan text
Test your understanding 6
Capital structure…

[Nercia@1234]

Okay thank you, ..

However when the questions says

What would be a suitable risk-adjusted cost of equity for the new
investment if Hubbard were to be financed in each of the following
ways

How do I know the suitable risk adjusted cost of equity…
Is it A , B, C or D ..
Or this question is not a multiple choice

[Nercia@1234]

I got it from Kaplan kit test your understanding 6, page 574

Hubbard, an all-equity food manufacturing firm, is about to embark upon
a major diversification in the consumer electronics industry. Its current
equity beta is 1.2, whilst the average equity ß of electronics firms is 1.6.
Gearing in the electronics industry averages 30% debt, 70% equity.
Corporate debt is considered to be risk free.
Rm = 25%, Rf = 10%, corporation tax rate = 30%
What would be a suitable risk-adjusted cost of equity for the new
investment if Hubbard were to be financed in each of the following
ways?
A By 30% debt and 70% equity
B Entirely by equity
C By 20% debt and 80% equity
D By 40% debt and 60% equity

[Nercia@1234]

thank you very much..

[Nercia@1234]

yes on the second adjustment they did mention cost of $5 per unit ..
so how did they get the sales unit

(ii) Production cost will be $5 per unit. The production cost will be made
up of:
Raw materials $2.50
Direct labour $1.50
Fixed overhead $1.00

[Nercia@1234]

Thank you. I haven’t seen it yet.

[Author]

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