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Please I need urgent clarification. In this question, we are asked to calculate the APV of the project ( this question is almost the same as Neptune), as well as it MIRR.
I solved the MIRR part by using the PV of returns (which is how Neptine was solved)
obtained for the base NPV used for the APV but the BPP solution used the APV ( ie Vg= Vu + Vdt total) in lieu of PVr.
Pls find the solution pasted below:
Cash flows
Time
0 1 2 3 4 5 6
$m $m $m $m $m $m $m
Net cash flow (600.00) 10.00 303.40 235.65 154.17 127.5 21.27
DF @ 9% 1.000 0.917 0.842 0.772 0.708 0.650 0.596
Present value (600.00) 9.17 255.46 181.92 109.15 82.88 12.68Quote:Net present value $52.26 million
[We now have to determine the effects of raising the finance (tax saving on interest and the issue
costs) and discount these at the Rathran’s cost of debt of 6.2%.
Amount raised = $600m/0.98 = $612.24
Issue costs = $12.24m
Annual interest = $612.24 x 6.2% = $37.96
Tax shield = $37.96 x 28% = $10.63
Present value of tax shield (assume 1 year delay)
Time
2 3 4 5 6
$m $m $m $m $m $m
Tax shield 10.63 10.63 10.63 10.63 10.63
Discount factor at 6.2% 0.887 0.835 0.786 0.741 0.697
Present value 9.43 8.88 8.36 7.88 7.41
Total present value of tax shield = $41.96
Adjusted present value
$m
Base case present value 51.26
Present value of tax shield 41.96
Issue costs (12.24)
Adjusted present value 80.98
Modified internal rate of return
MIRR =
PV of investment period
PV of recovery period 1/n x (1 + re) – 1
PV of recovery period = $600m + $80.98m = $680.98m
PV of investment period = $600m
PV of investment period
PV of recovery period
= 680.98/600 = 1.135
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hi tokunboayoola,can u share your P4 mock exam paper to me and email to bixingchong@gmail.com.Many thanks.
Hi colleagues. could you please share the P4 Mock to me?Thank you.My email is: dharu@accamail.com
Please i would be grateful if you can send me the mock questions and the solution for study.
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hi tokunboayoola,
could you please e-mail copy of your mock exam & solutions to polverigiani@yahoo.co.uk
thanks- Topics: 0
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Hi toku could u pls e-mail me a copy of the bpp mock and the solution to thathocharles@gamil.com
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Hi toku could u pls e-mail me a copy of the bpp mock and the solution to thathocharles@gmail.com
Hi toku, could you pls e mail me the BPP Mock and solutions at charitylombe@yahoo.com.
thanks
send me copy of mock Q and A at koolliver@hotmail.com as well.. Thanks.
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Could anyone please mail me bpp and kaplan mock paper for P4 june 2012 at this email address : nida_1577@hotmail.com
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