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Hi john for part c why they the growth rate of 4%has not been used?
Whats the logic behind finding the FCF based on past value of the firm.Due to the change in capital structure isn’t it suppose to change the value of firm?
Hi john it seems like you are not answering my queries.Any problem or are you getting my questions by the way?Thanks
I am answering your questions, but P4 questions take a lot longer to answer and I have a very busy day today (and you do ask rather a lot of questions 🙂 )
For part c the need to know how much extra they need to earn on the new debt capital. So they need to calculate the minimum extra FCF there will be, over and above what they are currently earning. (Management may think there will be growth of 4% but this is nothing to do with it – (c) wants the minimum extra that they need to earn).
Thanks a lot.Next time i will be more patient.Actually you made our expectations so high by answering so promptly that we sometimes forget you may be very busy in a particular day.Sorry about that.
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