Nente 6/12

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May 23, 2015 at 7:50 pm #248220
BrianH
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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
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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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