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In example 4 of chapter 16, the lecturer mentioned as well as the notes that you use similar borrowing rate to work out the PV of future cash flow and the difference between the proceed and total PV is Equity. However, the answer at the back used the rate of effective interest rate. Please advise which one is correct.
Also – If I continue the tabular format what the lecturer showed in the video I have a C/F borrowing of around 4.2m, should this not match to my equity which I dont receive in cash term at initial stage?
Hi,
Yes, I think there is an error in the materials/video. Has it not been answered under the video or on another thread?
Thanks
Hi Chris
I have the same problem with this question. I have looked under the video and tried searching the forum but to no avail.
Could you please post a link to the other thread as I am totally lost with this.
If the answers at the back are correct and you should use 7.67%, I still do not understand why the $1m goes to equity and is not split proportionately?Thanks in advance.
Nurul – did you find the other thread?
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