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Nente 6/12

Forums › ACCA Forums › ACCA AFM Advanced Financial Management Forums › Nente 6/12

  • This topic has 1 reply, 1 voice, and was last updated 10 years ago by BrianH.
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  • May 23, 2015 at 7:50 pm #248220
    BrianH
    Member
    • Topics: 44
    • Replies: 40
    • ☆☆

    Hi sir

    In the question it states that ‘overall cost of capital of 11% is reasonable compensation for the risk undertaken…’
    To me this would imply that 11% is the WACC as is says ‘over all’…but in bpp solution they use 11% as the Ke for caclulating the free cash flow??

    Thanks

    May 23, 2015 at 9:06 pm #248230
    BrianH
    Member
    • Topics: 44
    • Replies: 40
    • ☆☆

    In the same question, part c, I was a bit confused over why we wouldn’t discount the option escerxise price to PV, since we discount the Pa, the asst value?

    Thanks

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