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M&A – example 4 – Nairobi plc

Forums › Ask ACCA Tutor Forums › Ask the Tutor ACCA AFM Exams › M&A – example 4 – Nairobi plc

Viewing 4 posts - 1 through 4 (of 4 total)
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  • January 27, 2018 at 12:26 pm #433422
    yiiyeooh
    Participant
    • Topics: 1
    • Replies: 1
    • ☆

    Hi John,

    May i ask the discount total cash flow for year 1 to 5 (answer: 35, 42,47,52,207), how did you calculate for it?

    Thanks

    January 27, 2018 at 4:18 pm #433435
    John Moffat
    Keymaster
    • Topics: 57
    • Replies: 54831
    • ☆☆☆☆☆

    I added the two cash flows together (and added 7 per year to each – the after tax synergy benefit) and then multiplied each flow by the relevant discount factor at 11% from the tables.

    January 28, 2018 at 4:47 pm #433648
    yiiyeooh
    Participant
    • Topics: 1
    • Replies: 1
    • ☆

    thank for the respond sir =)

    But may i ask how u get the 7?

    January 29, 2018 at 7:15 am #433727
    John Moffat
    Keymaster
    • Topics: 57
    • Replies: 54831
    • ☆☆☆☆☆

    The question says that the synergy benefit is 10 p.a. before tax, and the tax rate is given as 30%.
    10 – (30% x 10) = 7.

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