• Skip to primary navigation
  • Skip to main content
  • Skip to primary sidebar
Free ACCA & CIMA online courses from OpenTuition

Free ACCA & CIMA online courses from OpenTuition

Free Notes, Lectures, Tests and Forums for ACCA and CIMA exams

  • ACCA
  • CIMA
  • FIA
  • OBU
  • Books
  • Forums
  • Ask AI
  • Search
  • Register
  • Login
  • ACCA Forums
  • Ask ACCA Tutor
  • CIMA Forums
  • Ask CIMA Tutor
  • FIA
  • OBU
  • Buy/Sell Books
  • All Forums
  • Latest Topics

20% off ACCA & CIMA Books

OpenTuition recommends the new interactive BPP books for September 2025 exams.
Get your discount code >>

business valuation

Forums › ACCA Forums › ACCA AFM Advanced Financial Management Forums › business valuation

  • This topic has 0 replies, 1 voice, and was last updated 5 years ago by misbahkiran.
Viewing 1 post (of 1 total)
  • Author
    Posts
  • July 12, 2019 at 3:32 am #522689
    misbahkiran
    Participant
    • Topics: 109
    • Replies: 194
    • ☆☆☆

    this is a concept explained in kaplan study text. please tell me is it right?

    in free cash flows valuation, if we discount free cash flows to equity at the rate of cost of equity instead of WACC, no need to deduct debt value from the PV of cash flows and finance cost need to be deducted from cash flows to calculate pretax flows to equity then after tax flows are discounted at cost of equity.

    in another worked example

    kaplan is using ungeared asset beta to calculate CAPM. can we use it ?

    Kaplan question is this.

    A is acquiring B an unquoted company. B is hoping to recieve 75 million. ungeared beta is 1.2 for Brisk free rate is 3% and market risk premium is 5.8%.
    forecast free cash flows
    1 10.3
    2 11.5
    3 13.8
    4 14.9
    Debt of B is 50 million 6% repayable in four years. tax rate is 30%

    in case yes then
    if we use ungeared asset beta to calculate CAPM and then discount free cash flows to equity at the rate of Ke (calculated as per CAPM) do we need to make adjustment of debt?as beta is already ungeared and didn’t take effect of gearing.

    please guide me it confused me a bit.

  • Author
    Posts
Viewing 1 post (of 1 total)
  • You must be logged in to reply to this topic.
Log In

Primary Sidebar

Donate
If you have benefited from our materials, please donate

ACCA News:

ACCA My Exam Performance for non-variant

Applied Skills exams is available NOW

ACCA Options:  “Read the Mind of the Marker” articles

Subscribe to ACCA’s Student Accountant Direct

ACCA CBE 2025 Exams

How was your exam, and what was the exam result?

BT CBE exam was.. | MA CBE exam was..
FA CBE exam was.. | LW CBE exam was..

Donate

If you have benefited from OpenTuition please donate.

PQ Magazine

Latest Comments

  • osman-the-zephyr@ on MA Chapter 1 Questions Accounting for Management
  • adebusola on MA Chapter 1 Questions Accounting for Management
  • Sharith on Interest rate risk management (1) Part 5 – ACCA (AFM) lectures
  • Sharith on Interest rate risk management (1) Part 5 – ACCA (AFM) lectures
  • John Moffat on Discounted Cash Flow Further Aspects, Replacement – ACCA Financial Management (FM)

Copyright © 2025 · Support · Contact · Advertising · OpenLicense · About · Sitemap · Comments · Log in