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Hi,
In calculating the beta for the project can you please explain how they have come to the below calculation?
0.89 = PAB X 0.15 + 0.80 X 0.85
PAB = 1.4
I calculated the 0.89. But I don’t understand the remaining calculation.
Many thanks
The question says that 15% of Reka’s business is in the luxury market (and therefore 85% is in the non-luxury market).
The overall beta of 0.89 is the weighted average of the betas of the two different markets.
(I recorded lectures working through the whole of this question. You can find them linked from this page:
https://opentuition.com/acca/afm/afm-revision-lectures/ )Hi John.. I didn’t get the part where Lumi’s offer is considered. How to get $30.8m? How come they arrive at 1463450?
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