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FUBUKI CO (DEC 2010)

Forums › Ask ACCA Tutor Forums › Ask the Tutor ACCA AFM Exams › FUBUKI CO (DEC 2010)

  • This topic has 1 reply, 2 voices, and was last updated 7 years ago by John Moffat.
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  • August 28, 2018 at 12:13 pm #469825
    globasd
    Member
    • Topics: 10
    • Replies: 1
    • ☆

    question is merely asking us to evaluate on financial grounds.

    Usually how do we know whether to calculate simply APV only ? or NPV and APV ?

    do we make assumption based on the given information ? if maybe (just assuming), cost of debt isn’t given ( and only cost of equity is given ) we just assume the question is asking us to calculate APV ?

    August 28, 2018 at 7:33 pm #469883
    John Moffat
    Keymaster
    • Topics: 57
    • Replies: 54830
    • ☆☆☆☆☆

    APV is better when there is a major change in gearing, and there is in this question. The other clue is mention of debt capacity in the question, because it is only relevant when calculating the APV.

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