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Hi, for sample answer, under Appendix 3 Forecast Financial Position (Proposal 1), shares is repurchased at $1 x 120m shares. Please may I know how to get the 120m shares?
Thank you.
They are raising $1,320 debt finance and using it to buy back shares with a market value of $11 per share. 1320/11 = 120 shares.
Thank you! By the way, please may I know for the Proposal 2, how to get the amount of Dr Current Asset 117.96 & Cr Reserves 117.96? Thanks..
As is stated in the answer, it is assumed that the additional investment generates returns at 12%, which is added to current assets and to profits (and therefore to reserves).
It is the difference between the current earnings and the proposal 2 earnings as shown in the first part of the appendix 3 workings.
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