June 2013

This topic has 1 reply, 2 voices, and was last updated 10 years ago by John Moffat.

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June 4, 2015 at 11:36 am #252989
seanog91
Member
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Hi,
Would you know they are squaring 1.09 when they are using the DVM in question 4 part A 50 million (the subsequent value) of the company?
I can not see the logic in it at all. Is it because we are in year zero and the subsequent value is in 2 years time?
https://www.accaglobal.com/content/dam/acca/global/PDF-students/acca/f9/exampapers/f9_2013_jun_a.pdf
https://www.accaglobal.com/content/dam/acca/global/PDF-students/acca/f9/exampapers/f9_2013_jun_q.pdf
June 4, 2015 at 1:29 pm #253024
John Moffat
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Because the dividends start two years ‘late’, the answer from the dividend valuation model needs to be discount by 2 years at 9% to get a value ‘now’. You can take the 2 year discount factor from the tables (or calculate it as (1/1.09)^2 using the formula)
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