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Chrysos co (June17) and Chakula Co June21

Forums › Ask ACCA Tutor Forums › Ask the Tutor ACCA AFM Exams › Chrysos co (June17) and Chakula Co June21

  • This topic has 3 replies, 2 voices, and was last updated 3 years ago by John Moffat.
Viewing 4 posts - 1 through 4 (of 4 total)
  • Author
    Posts
  • April 30, 2022 at 5:14 pm #654673
    Kevin1107
    Participant
    • Topics: 3
    • Replies: 2
    • ☆

    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

    April 30, 2022 at 8:19 pm #654681
    John Moffat
    Keymaster
    • Topics: 57
    • Replies: 54700
    • ☆☆☆☆☆

    Yes, 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 🙂 )

    May 1, 2022 at 1:25 am #654686
    Kevin1107
    Participant
    • Topics: 3
    • Replies: 2
    • ☆

    many thanks

    May 1, 2022 at 10:02 am #654704
    John Moffat
    Keymaster
    • Topics: 57
    • Replies: 54700
    • ☆☆☆☆☆

    You are welcome 🙂

  • Author
    Posts
Viewing 4 posts - 1 through 4 (of 4 total)
  • The topic ‘Chrysos co (June17) and Chakula Co June21’ is closed to new replies.

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