- This topic has 1 reply, 2 voices, and was last updated 1 year ago by .
Viewing 2 posts - 1 through 2 (of 2 total)
Viewing 2 posts - 1 through 2 (of 2 total)
- You must be logged in to reply to this topic.
Congratulations to Jamil from Pakistan and Jeeva from Malaysia - Global Prize winners!
see all ACCA December 2022 Genius Hunt Competition winners >>
Specially for OpenTuition students: 20% off BPP Books for ACCA & CIMA exams – Get your BPP Discount Code >>
Forums › Ask ACCA Tutor Forums › Ask the Tutor ACCA AFM Exams › Fubuki Co December 10
I was just wondering why they’ve not regeared Fubuki’s asset beta before inserting it into CAPM? Is it because the entire project is financed by debt?
Also why do certain questions go a step further and calculate WACC for using as the discount factor for calculating the base NPV?
It is because the answer is calculating the APV (because there is a substantial change in the level of gearing).
With APV, for the base case NPV we always discount at the cost of equity if it was all equity financed (and then adjust later for the effect of the gearing). If a company is all equity financed then the equity beta will always be equal to the asset beta.
I do explain all of this in my free lectures 🙂