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I had the NPV calculation for C section.
Section A: was mostly theoretical
Section B: The question about FRA was very difficult for me, the style of the question was also not familiar.
Section C: I used 13% WACC and believe it is true. 6% was not right because it was only for debt and also we shouldn’t consider these costs because WACC also contains it. We had to use nominal WACC because there were different inflation rates. If there was one general inflation we could calculate the nominal WACC with fisher formula (1+i)=(1+r)(1+h)
I got positive NPV
question b was about working capital and there was an inflation rate we had to calculate the inflated numbers for each year, we had to consider that working capital would be positive in the last year and as I remember we had to discount it.
the third question was about the profitability index and I think most of you will get some of the marks from 5.
Unfortunately, I don’t remember the second C section question if anybody does we can discuss it.
