Respected Sir,
Good morning!
In Chakula Co June21, Appendix 2: Estimate of Kawa Co equity value if demerger is undertaken
It Is expected that Kawa Co will maintain its capital structure alter the unbundling. it original d/(e+d) is 1/4. so market value of equtiy is firm value * 3/4 = 75% x $1,882·8m = $1,412·0m
In Chrysos co June17, Additional financial information
Chrysos Co aims to maintain a long-term capital structure of 20% debt and 80% equity in market value terms. we use this capital structure calcualte Ke and wacc, why in the end, we calculate the market value of equity not use firm value* 4/5?
Answer use firm value - debt value=MVe =
I just want to know weather the both * 4/5? or - debt value can get mark.
Many thanks
Ask the Tutor ACCA AFM
Chrysos co (June17) and Chakula Co June21
4y ago#1Yes, it would get the marks.
Do appreciate that there is almost never just one correct answer to questions in the AFM exam. If you did what you suggest that you would still get the marks for it (assuming you were doing the calculations correctly :-) )
many thanks
4y ago#3You are welcome :-)
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