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Hi,
There are several exercises where the asset beta of a similar company is being calculated and then used in the CAPM formula directly (an not being geared).Also the Ke found is then used for discounting without calculating WACC.
In these exercises it is stated that the projects will be fully funded out of debt – is this the reason of all the above? If yes will you be able to explain the logic?
Many Thanks
Burung specifically asks you to take an APV approach, and for Fubuki you are expected to calculate the APV (because there is a substantial change in the gearing).
You must surely have studied APV before starting to attempt past exam questions?
It is explained in full in my free lectures 🙂
Hi John,
Yes it is clear now – I just revised the Study text again after my post so sorry for silly question
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