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Hello Sir,
Please may you help. In part b of the question, i see the figure they used for fcfe is $87.2 m but then are we not supposed to subtract any loan repayments to arrive at the fcfe ie, the repayment of secured loans $31m tht is under the Financing section of the Cash flow statement? Confused.A lot of the answer to this question depends on assumptions (as do all question 1’s in the exam) and provided you state your assumptions (and they are reasonable) then you get the marks.
Here, we have no idea what repayment of loans there will be in future years (or indeed whether there will be any loans after the takeover) and we have therefore no alternative but to ignore them.
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