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Dear sir, i understand that we hve to discount da future cflows at ytm( which is before tax) to calculate the m.v of a bond but in calculating wacc in part a, y the examiner has again used ytm of 4.65 instead of using 4.65(1-tax rate) 3.9%? B/c ytm minus tax gives kd and in wacc we always take kd after tax! Secondly how do we knw dat dollar 800 is balance sheet value instead of market value?….jus b/c info regarding the calculation of m.v was given..so for the sake of it we calculated? Thanksss
Dear sir, kindly explain y in proposal 3 they r adding int saving of 1432 in current assets, due to debt being reduced IF they r not deducting additional int payment( due to debt being increased) in prop 1 n 2 frm current assets? Thnk u
The issues were i gues they needed internally generated funds as debt n equity was expensive relatively ….due to asymtry info….they were afraid of euros being depreciated resulting in volatile cfz……usin internal funds wil reduce the div capacity etc…..! Relatin to q4 yes it can b described dat way! N above i was outa time n cudnt attempt q1 theory part which u r talkin abt….attempted 80 perc only! Jus prayin to pass! Goodluck …!
Hi danychew….i did dat right but my paper was jus satisfactory…awl the very best to u too!
Dear john, in the 2nd lat para they write if no blockage exists remittable funds wud be 12.26 m….could u plz tel me wt figures did they add up to arrive at 12.26?
Seen n understood :)…i use a slightly different method though…..one more thing in dis….wt is the deal with the word res value after INFLATION? It doesnt hve any numerical implications right:)?
Dear sir they say in the ques ….a bal adj is required… if so y r we nt deducting residual value while calculating cap all? If they said res value is after tax den we dont deduct it but here it is after inflation… Does it mean wen res value is after tax or after inflation the calculation wud b 1250÷ 10 in dis particular ques?
Im unable to calculate mirr in this ques thru the standard formula given in exam (203/426)^(1÷5) multiply by 1.11 minus 1. Plz guide me y dis formula is not applicable here as it was there in neptune ques?
Dear sir, with regards to MIRR calculation, y have they taken 6 yrs instead of 5 yrs in the formula? Since the project is for 5 yrs….is it dat tax is in arears therefore they have taken 6 yrs? Thank u
I previously supposed they cant co exist on the grounds…..Eomp para comes wen the opinion is unmodified(though report modified) n basis of opinion comes wen opinion is modified(again report modified). So how can there b 2 opinions i.e modified n unmodified in one single report?
By EOMP I mean emphasis of matter paragraph. Now can both basis of opinion para n eomp para come in one single report issued by auditor? Plz guide…. thnk u
Mr mike basis of opinion comes wen opinion is modified n EOMP comes wen opinion is unmodified. My ques is can they both co exist? Thnk u
If the bond is being discounted at ytm which is actually before tax, then to convert it into kd we have to make ytm after tax i.e kd=ytm (1_tax) . I dont get y in wacc calculation where kd after tax is taken always, he has rather taken ytm?? Thanksss a lot
He has written TOTAL MV which means debt plus equity ie 12 + 88. Sir if he had written only MV , would it have meant only equity then? Thnk u
1.As Tori consists of A,B n C by existing shareholders do u mean shareholders of dept B as well ? Coz this dept is being spun off n the shareholders of the new company wil remain the same. 2. Vogel is 1st aquiring tori with all its depts n after that B wil b spun off n C sold. Is it? If nt plz calrify me the concept provided im comfortable wid the calculations in this ques Thanks 🙂
So dats means by incorporating growth in cash surpluses n decomissioning costs they have become nominal cfs …therefore we r discounting them at nominal coc of 10%? Thank u so much
Sir y r we dicounting cfs with MONEY/Nominal coc of 10% ? After applying growth of GDP do they become money cfs?
Dear Sir, In the same ques they are combining the values of dept A,B,C….if dept B is to b spun off wts the logic behind adding “dept B’s value? “and deducting indvidual companies’ value for calculating the premium. Is it vogel company wil stil have to pay to depart Bs shareholders for acquring tori? Thank u