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Ask the Tutor ACCA AFM

Morada Sep/Dec 16 Q1

JJ7y ago
Dear Sir, Just wondering for the calculation of moradas asset beta (0.94) under the first proposal, why the debt value of 126.4m is used instead of the new value of 25.6m? Many thanks for your help, Justine
AAnas7y ago#1
We have Morada's equity beta at 1.2 which is the equity beta for the "whole organisation". Hence, the asset beta will be for the whole organisation so, we use Market value of equity and market value of debt as the whole organisation (as calculated initially before any of the proposals).
John MoffatJohn MoffatTutor7y ago#2
anasalkhaileh: Please do not answer in this forum, because it is the Ask the Tutor Forum and you are not the tutor. But please do help others in the other AFM forum :-) justine1: What anasalkhalaileh has written is correct :-)
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