- This topic has 1 reply, 2 voices, and was last updated 1 year ago by .
- 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 >>
Sir in this Qs exmainer has calculated Estimated corporate value of $47,944m and
Estimated equity value = $47,944m – $1,800m = $46,144m
My Qs is that instead of 1800 why has he not deducted (47944 * 20%) = 9589 from corporate value as in Qs it was mentioned that capital structure is such that 20% is Debt
The reason is that although they aim to have 20% debt in the future (and so that has been used in the calculations in appendix 2), they will not have 20% initially – it will just be the overdraft converted into debt.
However, you would not lose many marks if you had done what you suggest.