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McTee (6/05)

This topic has 3 replies, 3 voices, and was last updated 7 years ago by John Moffat.

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May 5, 2016 at 5:49 am #313743
Dinh
Participant
- Topics: 18
- Replies: 15
Dear Sir,
I am working on McTee question. In part b, when we look at the right issue, the cost of equity is 22.2(1.04)/302 + 0.04 = 11.6%. What is the 0.04 in this calculation? i can not find this 0.04 in the question. Please advise.
Thanks,
DT
May 5, 2016 at 8:26 am #313765
John Moffat
Keymaster
- Topics: 57
- Replies: 54478
It is the dividend growth formula, and the dividend growth rate is 4% (0.04).
It is given in the question in the paragraph following after the Statement of financial position.
February 15, 2017 at 7:07 pm #372587
usama sohail
Member
- Topics: 4
- Replies: 17
in calculation of Cost of 80 SFrm loan through IRR…why interest rate is doubled as 2.5 + 2.3…what is concept behind this???
February 16, 2017 at 8:09 am #372655
John Moffat
Keymaster
- Topics: 57
- Replies: 54478
The interest rate is not doubled at all!
Note (d) of the question says that the interest is 2.5% plus an additional 2.3% when swapped (and the word ‘additional’ is printed in bold letters.)
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