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BPP Revision Q35 Somax

Forums › Ask ACCA Tutor Forums › Ask the Tutor ACCA AFM Exams › BPP Revision Q35 Somax

  • This topic has 2 replies, 2 voices, and was last updated 12 years ago by AvatarJohn Moffat.
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  • October 27, 2013 at 2:42 am #143815
    Avatartournament
    Member
    • Topics: 7
    • Replies: 7
    • ☆

    Hi John,

    I have another question need to ask. In the BPP Revision Kit Question Q35 Case Somax.

    I can understand the answer fully until the last part when working out new WACC. Why the answer did not include the planed loan of $260M into the calculation to work out the WACC? Since the new loan will affect the capital structure and effectively affects the cost of capital.

    Thank you very much!

    October 28, 2013 at 6:28 pm #143977
    AvatarJohn Moffat
    Keymaster
    • Topics: 57
    • Replies: 54838
    • ☆☆☆☆☆

    I am really sorry but I am away from home until Thursday and so I do not have access to the question.
    I will answer when I get back (and please remind me on here if I forget!)

    November 1, 2013 at 7:34 am #144279
    AvatarJohn Moffat
    Keymaster
    • Topics: 57
    • Replies: 54838
    • ☆☆☆☆☆

    It is because the second paragraph of part (b) says that they are also proposing to raise equity finance and that there will as a result be little change in the gearing 🙂

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