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march/june 2017 Chrysos

Forums › Ask ACCA Tutor Forums › Ask the Tutor ACCA AFM Exams › march/june 2017 Chrysos

  • This topic has 1 reply, 2 voices, and was last updated 8 years ago by AvatarJohn Moffat.
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  • August 31, 2017 at 7:50 pm #404733
    AvatarAnonymous
    Inactive
    • Topics: 1
    • Replies: 0
    • ☆

    hey im kind of confused as to why the 8% increase in cash flows were used in calculating the market value of the manufacturing business unit . my reasoning behind this is the 8% increase is only a result of the future mbo and so has no impact on current market value of the business unit. i used the 435 / .1 as a pose the the answer which was 435 x 1.08 / .1 . thanks for any response

    September 1, 2017 at 6:28 am #404796
    AvatarJohn Moffat
    Keymaster
    • Topics: 57
    • Replies: 54845
    • ☆☆☆☆☆

    No – the answer is correct. The value placed on it for the MBO (and therefore the amount to pay) will be based on the future expectations.

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