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Okay thank you sir. I also have a generic doubt, if the question says cash flows in Y5 increase by 2% but stay at this rate forever, will i discount Y5 cash flow using the Y5 PV factor and then treat it as a perpetuity from Y6 onwards?
oh so always in the exam i should calculate gearing using the market values not the book values?
also for the part a) iii) of the question can you explain why we do 0.7 x 5.6 and not 7.02?
sorry mark to market i got confused its forex. just clarify the 1st doubt, thank you.
is it because the cash reduces the value of combined company thats why we cant follow this approach?
and i have not given FM so my basics are a bit shabby. Anyways sir, thank you so much for the help.
i understand how to value it i’m just unable to understand when to add it to find value of combined company
and the value of the business is the PV of future c/f so the option of receiving cash of 3102 is immediate not a pv of future c/f so we don’t discount it but if it was one year from now we would, am i right in thinking that?
just one last thing so that means when we use any method other than FCF for valuing the unbundled part of the company it will be added to value of combined company? and if it was forecast for a year the 1200 would be deducted rigjt?
And, when you said MBO, the value is PV of future cash flows, so isn’t the cash we receive a part of that so why won’t we include it in calculating our valuesorry im a bit confused, so we will add the division thats being sold off in which cases exactly? When its only being sold off not for cash? so if the company is being valued using FCF or straight up recieving cash it wont be added to find the value for the combined company but if its valued using any other method like P/E, it will be added, is that right?
also just one more question – why havent we added the value of MBO to the value of chrysos to find its value and then do 40%? For example when we did cigno se/dec 15 we did value of combined company as value of sell off+ value of anatra’s R&D, so why arent we adding the value of MBO to find the value of company?
appendix one, is it because its being sold so the management takes over the debt and equity thats why we dont deduct debt of the manufacturing business unit?
Also a few more q’s,1) why havent they deducted additional investment of 1200 to find the FCF in appendix 3? I understand your answer in other q was that we calculate the PV of c/f’s thats why, but i didnt really understand what this meant, we always deduct additional investment for calculating FCF right? so why is this different?
2) And for the 3102 we recieve from supplier why dont we calculate its present value? im sort of confused on when we need to calculate the PV of a reciept and when we dont
3) the sofp we prepare isnt that a forecast sofp? since its a forecasted one shouldnt depreciation be deducted from nca? and interest paid deducted from cash?
if the division was sold for cash, would we have added it to find the value of the combined company?
also if the division was sold for funds rather than value, will those funds be added same as we did for value of sell off or will it be deducted from value of combined company? Also does it being a demerger or MBO have an impact on how this value of combined company is calculated?
And also the WACC how is it for the combined company sales revenue etc is of anatra
isnt this how we usually do value remaining, value of combined co – values of the individual companies and then deduct the premium for it to get the reamining value, why is this q done differently
sir in chithurst co question sep/dec 2016 for iping how do we understand it was following a residual dividend policy
sir for this question in FCF to firm for foshoro, i am not getting the growth rate, i did
(91/83.3)^1/3-1 but im getting negative 0.6358So in the q if they give figures for earnings, dividends and investments, if ividends are decreasing and investments are increasing we will say that the dividend policy is consistent with the investment policy?
