[wesleylim]

Hi john, another for Lirio Co. March/ June 2016

Q1

Para 4 Item 2. It mentioned an investment equivalent to the amount of dep’n to keep its ……non-current assets of $50million.

Why is this amount i.e. $50mil x 25% = $12.5mil not deducted from the calculation for dividend capacity of Lirio?

[wesleylim]

Same question, referring to the growth model.

the growth rate must be in perpetuity for it it be considered in the formula?

As you can see from the question, page 4, 3rd para, 2nd line, it mentioned 8% @ the first year. Could this be used as the growth rate as part of the growth model to get the market value of firm?

[wesleylim]

Thank you John

[wesleylim]

Also, 5th para last sentece “The marketing expenditure can be assumed to be made at the end of year 1 and be a tax allowable expense”

It mentioned tax allowable expense but how should we reflect this in our NPV calculation? It didn’t appear in the answer sheet…

Thanks John.

[wesleylim]

scroll through other topics and got it!!! thanks john

[wesleylim]

Hello there

Need your help here on deriving the interest amount for subsequent years.

If the short term loans & overdraft are balancing figure from the SOFP, i would need calculate the reserves as well. However, without the interest charge figure, i couldnt calculate the reserve.

Can you assist on this matter? Thanks.

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