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Hi John
In the question Pursuit Co, we were asked
whether it would be beneficial to the
shareholders. I thought it was only going to be
equity values i.e.
0.5%*189,169,000 –
[(0.5%*140,000,000)+(0.9%*40,095,000)]
However the total market value was used. Can
you please explain why? Thanks
In future please say which exam the question comes from – I can’t remember the name of every question in every exam 🙂
The whole of any gain in market value will always go to the equity – debt does not make a gain.
What you are suggesting would be sharing the gain between the equity and the debt, which is not the case.
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