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Answer for the cash position where are they coming from
Why the estimated value divide cost of capital directly not the difference between cost of capital and growth rate
Plus the growth rate is 7 which is bigger than 6.5For proposal 3 the Amount to pay shareholders should be 1.2 *40 why ignore premium of 20 percent to buy
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As the answer states
With the restructuring option they would become the majority shareholder with just over 87 percent of the company for a total investment of 210 how to calculate the 87 is based on whatThank you so much
For exams that are not on the ACCA website, you must tell me either the name of the question (or, if it is in the current edition of the BPP Revision Kit, then the number of the question).
Otherwise it takes me ages to try and find it, and I have so many other questions to answer that I just do not have the time.
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sorry
the name is Doric past papersYou have misread the question. The growth in sales revenue of 7% applies only once – the revenue then continues at the same level (it does not continue to grow at 7%).
With restructuring, shareholders will get 40M $1 shares, and bondholders will get 270M $1 shares. So the total will be 310M and the bondholders share is 270/310 = 87%
(NOTE: to anyone else reading this answer, Doric was in the December 2010 exam and was also in a pilot paper. However the numbers in the two questions are different. Zoezoeness’s question refers to the December 2010 exam question. The ‘Doric’ in the BPP Revision Kit is from the pilot papers and has completely different numbers.)
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