Sorry to bother you Sir,
I have a little question about this question Kdat is 4·5% x 0·72=3.24%? insteads of using IRR after tax
Year 0 1 2 3 4 5
Price 110.16 -4.248 -4.248 -4.248 -4.248 -109.248
using this CF I calculate the Kdat is 2.97%?lead to difference of WACC 0.1%,
Q1?Do I understand correctly? about actual kdat in FM???
Q2?I would like to know if it is straightforward to use Kd*(1-t)=kdat ??? in the AFM exam ?
Really thanks!!!
Ask the Tutor ACCA AFM
Newimber co march june 2019
4y ago#1Strictly the answer should have calculated the IRR (and not taken Kd(1-t) because that is only valid if the debt had been irredeemable).
Usually the examiner has allowed the approximation in the past (and the difference of 0.1% is immaterial).
However now that the exam is computer based, it is just as quick to use the IRR function in the spreadsheet provided and calculate it precisely.
Really thanks!!!
Really help me a lots!!!
4y ago#3You are welcome :-)
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