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“Chrysos Co’s current value has not been given and therefore it is not possible to determine the financial impact of the equity value after the restructuring has taken place on the company as a whole. ”
Sir this is one of the lines mentioned in the Answer. I am finding myself muddled, because i don’t understand why is there a need for us to even know “Chrysos Co’s current value” and by current value what are they alluding at? MV of equity pre-reconstruction or MV of firm pre-reconstruction ?
We are not given the current MV of the equity in Chrysos and so we are not able to comment upon the change in the value.
sir for the calculation of Mac D we could have used the YTM also, right? instead of the spot yield curve for the company at BBB rating.
Am not sure if YTM be found out if the capital and interest is paid annually but for the other one where coupon is paid annually, i think we could have used YTM.
What do you think sir?
sorry sir by mistake posted it here. but the second doubt related to Mac D is from Conejo co (sept dec 17).
Depending on the information given, the MV is the PV of the flows each year discounted at the relevant spot yield rate (as adjusted for the yield spread), or alternatively the MV is the PV of all the flows discounted at the YTM.
The YTM is effectively the average return per year.
Have you read the technical article on this on the ACCA website? It is a good article.
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