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fubuki

Forums › Ask ACCA Tutor Forums › Ask the Tutor ACCA AFM Exams › fubuki

  • This topic has 1 reply, 2 voices, and was last updated 1 year ago by John Moffat.
Viewing 2 posts - 1 through 2 (of 2 total)
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    Posts
  • December 5, 2021 at 5:30 pm #642637
    mehazia
    Participant
    • Topics: 54
    • Replies: 6
    • ☆☆

    in this question for disc rate
    1st after using capm and finding equity beta for Haizum .i substitue the values of eqty and debt and then calculaye asset beta after which the asset beta = eqty b of fubuki and then reusing the capm will end up with a disc rate ,since it is all eqty financed for calculation of disc rate for npv.
    isnt this correct?

    why are we doing this
    Issue costs 4/96 × $14,488
    instead of just calculating 4%*14488

    December 6, 2021 at 8:47 am #642670
    John Moffat
    Keymaster
    • Topics: 57
    • Replies: 51541
    • ☆☆☆☆☆

    What you write about the discount rate is correct because we are taking an APV approach.

    With regard to the issue costs, the wording of the question is not clear and so you could have calculated the issue costs either way. Obviously the final answer would be a little different, but the examiners answer makes it clear that full credit would be given for doing it either way.

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