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Dear Sir,
In the question Fly 4000 in Revision kits (BPP) part b: apply DVM ideas based on the 20X5 FCFE post reinvestment of $87.2m, which represents a surrogate for the dividend that could be paid, … d1=87.2×1.063. How can we get the figure 87.2? We are basing on the FCFE so why don’t we calculate d1=101.7 x 1.063 ?
Thanks,
DTThe 87.2 is the cash inflow before management of liquid resources, ignoring the proceeds from the sale on the joint ventures (because that is not something that will be recurring in the future).
Thanks Sir. I understand to add back the proceeds from sales on the JV and how about the decrease/increase in short term deposits and repayment of secured loan? we don’t consider it because of same reason (not recurring transactions) or any other reason?
Thanks,
DT
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