Sir this question is a case of change in capital structure, but where question says that Kingtim Co plans to invest $60m in non-current assets for the outdoor shops. Asset beta of similar companies in outdoor retail sector is assumed to be 0·88.
So is it also a diversification case?
Ask the Tutor ACCA AFM
D20 Q1 Kingtom co
Also its written in the question that She is therefore proposing to expand the company’s current limited sales of camping products in its garden centres by establishing a chain of Kingtim outdoor shops, selling camping, walking and other outdoor equipment. So does this indicate that it is also a case of diversifcation?
5y ago#2There is already a degree of diversification because they already sell camping products in their garden centres. By establishing a chain of outdoor shops to sell camping products is in a sense increasing this diversification (you could mention this, but it is not really particularly relevant to what is required except insofar as obviously the overall asset beta of the business will change).
Sign into reply to this topic.