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Eview Cinemas Co

Forums › Ask ACCA Tutor Forums › Ask the Tutor ACCA AFM Exams › Eview Cinemas Co

  • This topic has 3 replies, 2 voices, and was last updated 2 years ago by John Moffat.
Viewing 4 posts - 1 through 4 (of 4 total)
  • Author
    Posts
  • August 29, 2022 at 6:03 pm #664606
    wlihong
    Participant
    • Topics: 2
    • Replies: 2
    • ☆

    While calculating the impact on EPS in question a, it adds the interest saved on 10% loan notes, but the answer doesn’t add the interest saved on other loan notes. As it says “The overall pre-tax cost of debt is currently 9% and can be assumed to fall to 8% when the 10% loan notes are redeemed”, it should save 1% interest on the remaining loan notes ($2700m), bank loans ($985m) and current liabilities ($2166m). Is this because I am overthinking?

    Many thanks in advance!

    August 30, 2022 at 9:00 am #664663
    John Moffat
    Keymaster
    • Topics: 57
    • Replies: 54699
    • ☆☆☆☆☆

    The EPS is only affected if the coupon rate on existing debt were to change. If the cost of debt changes then the market value will change but the coupon rate is not affected.

    August 30, 2022 at 10:12 am #664672
    wlihong
    Participant
    • Topics: 2
    • Replies: 2
    • ☆

    Okay, understand!

    Thank you very much!

    August 30, 2022 at 5:35 pm #664695
    John Moffat
    Keymaster
    • Topics: 57
    • Replies: 54699
    • ☆☆☆☆☆

    You are welcome.

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    Posts
Viewing 4 posts - 1 through 4 (of 4 total)
  • The topic ‘Eview Cinemas Co’ is closed to new replies.

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