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From,
Ogo
Sir,
In Pursuit Co question, for additional investment requires 18c per increase in sales revenue. in this case 18/100 x 3013 (the increase) was used…
I’m kind of confused on when to divide by 100 or by 100 plus the percentage increase. in this case 18/118
Sir ,
why is the investment in non current asset and working capital calculated as 15% x 20/120 x 80 ? I thought it will be 15% x 20/100 x 80. why 20/120?
Sir,
Could please explain to me how they arrived at the probability figures?
I can’t figure it out.
Thank you.
Sir,
I’m also finding it difficult to figure out why 19 (discounted value)is being used when calculating for terminal value of Omnigen instead of 32 (free cash flow value).
In another similar question- Intergrand (SFM 12/02), Bpp used 13.2 ( free cash flow value) NOT 9.3 (present value) to determine the terminal value.
My question is, how do I know when to use PV and when to use free cash flow value?
Thank you.
Tutor,
Why is it that the Sales revenue and the relevant cost were not inflated?
I can’t figure out why.Thanks.
Sir,
Why is it that after year 4, head office overhead were only increased by inflation rate of 2% (year 5=66, year 6=68) instead of $5000 + 2% ( year 5= 70, year 2= 65)?
Thank you.
Sir,
Why is that the Revenue/contribution & fixed cost is not inflated by the inflation cost of 2.5%?
Thanks
Sir,
On the above question, we’ve been asked to forecast the P/L and balance sheet. As per the question, the short-term borrowing will be the balancing figure. However, I cannot get the balancing figure until I have the reserves for the year, and I cannot have the reserves amount until i have the profit for the year. And to arrive at the profit, I need to know the net interest payable for which i need to know the short-term loan amount(which is the balancing figure) to consider its interest.
I don’t know if i am missing anything on the question, could you please help me on this?
Thank you.
Sir,
In part (a) iii, Why is it that Non-Current asset is 100% Exposure? I thought there will be no exposure since it is owned by the Namel Co, and does not involve cash conversion from Maram to Euro.
I can’t figure out the reason behind that, please help.
Thank you
Sir,
I need help in the calculation of future outcome. According to the formula, it is:
“Receipt x size of the contract x number of contract x length of the contract / one year.”
My question is this: why is it that in Awan Co, the length of contract is 3/12 is used?
From my understanding, the length of investment should be 4 months (ie from 1 February – 1 June 2014).
Sir,
For five year VAR = $1,864,000 x 5 to power 0.5 = $1,864,000.
Why is 5 raised to power 0.5? it a standard formula or what?
Thanks.
Sir,
I thought that when calculating for IRR, that value of one of the NPVs must be negative, Why is it that they used two positive NPVs?
Sir, please I have one more question. In the answers to part (e) by Bpp, under Anchorage’s viewpoint, it states:
” The alternative would be to borrow directly at SFr LIBOR + 0.75% per a year (5.75% – 5.0%)”.
But according to the information provided, Anchorage can borrow in SFr at a floating rate of between 5.75% and 6% depending upon which form of borrowing is selected)ie in the euromarket or the Swiss domestic markets). SFr LIBOR is currently 5%.
My question is, how did they come up with “SFr LIBOR + 0.75% per a year (5.75% – 5.0%)”? I can’t figure out the logic behind that.
Thank you.
Ok, that makes sense now. Thank you very Much Mr. John.
I appreciate the assistance.
Sir,
Another question is this, in estimating Anchorge WACC, why is the value of P0 = 1?
Again, in (d) part of the question, there is a suggestion (by Bpp), that with 1600 share in issue (at 2.60 share price), this represents a market capitalisation of $4160 million. if dividend payments were capitalised at this return (6.668%) on equity, this will suggest a market capitalisation of $4049 million.”
How did they arrived at market capitalisation of $4049 ?
Sir,
Could you please explain why the combined asset beta post-acquisition is estimated as:
(0.8 x 0.285) + (0.2 x 0.614) = 0.351?.From my own understanding, I thought that since Anchorage’s proportion of post-acquisition cash flow is expected to be 20%, meaning Polar Finance will have 80%. The combined asset beta post acquisition supposed to be estimated as:
0.285 + (80% x 0.614) = 0.7762. or (0.285 + 0.614) x 80% = 0.7192.I didn’t understand the logic behind the above estimated combined asset beta post-acquisition by Bpp.
Thank you.
