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Sir
1) i m facing problem in calculating Issue cost of of debt and equity in APV calculation??
Sometimes i see that issue cost are calculated as follow
$40m * 2/98
Sometimes as follow
$40m *2%
So i get confused about when to use which way as in the passage i can’t find any specific line to help me identify this thing
so can you help me by identifying those line such as ” if passage says this then we will use this way otherwise another way”
2) In calculation of APV how much fund we should raise??
In this case we will alway count (initial investment for the project + working capital at year 0)
Am i right sir???
1. If it is not clear from the question whether the issue costs are calculated out of the amount raised or if the amount raised has to cover the issue costs as well, the state your assumption and you will still get the marks.
2. The question will tell you how much funds are raised in an APV question.
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