• Skip to primary navigation
  • Skip to main content
  • Skip to primary sidebar
Free ACCA & CIMA online courses from OpenTuition

Free ACCA & CIMA online courses from OpenTuition

Free Notes, Lectures, Tests and Forums for ACCA and CIMA exams

  • ACCA
  • CIMA
  • FIA
  • OBU
  • Books
  • Forums
  • Search
  • Register
  • Login
  • ACCA Forums
  • Ask ACCA Tutor
  • CIMA Forums
  • Ask CIMA Tutor
  • FIA
  • OBU
  • Buy/Sell Books
  • All Forums
  • Latest Topics

PQ Awards Nominations

Please help us to win one of the PQ Magazine awards and send in the voting form >>
You can nominate us in any or all of the following categories: Online College of the Year, Study Resource of the Year, Private Sector Lecturer of the Year, and Accountancy Personality of the Year.

Specially for OpenTuition students: 20% off BPP Books for ACCA & CIMA exams – Get your BPP Discount Code >>

Pursuit Co (Jun 11 adapted)

Forums › Ask ACCA Tutor Forums › Ask the Tutor ACCA AFM Exams › Pursuit Co (Jun 11 adapted)

  • This topic has 3 replies, 3 voices, and was last updated 6 months ago by John Moffat.
Viewing 4 posts - 1 through 4 (of 4 total)
  • Author
    Posts
  • August 6, 2022 at 8:46 am #662540
    mathurya
    Member
    • Topics: 11
    • Replies: 4
    • ☆

    Hi,

    It says that after debt obligations and equity shareholders have been paid, benefit to pursuit co is $52,000. But only the premium of $9,022,000 has been deducted from the synergy benefit. Not the debt of (10% of 40,095). why is that?

    Thanks!

    August 6, 2022 at 9:31 am #662544
    John Moffat
    Keymaster
    • Topics: 56
    • Replies: 51582
    • ☆☆☆☆☆

    The synergy benefit is the extra value of the whole firm (after taking into account the debt). This all belongs to the shareholders, subject to the premium that has to be paid to the equity in Pursuit.

    August 7, 2022 at 12:00 pm #662601
    acnam
    Member
    • Topics: 0
    • Replies: 4
    • ☆

    Hi,
    with regard to this question and terminal value: why did in sample answer working 4, PV of cash flows in perpetuity calculated CF x g/wacc – g, and not only growth?
    And than discounting, why did they use factor 4years?

    August 8, 2022 at 9:01 am #662639
    John Moffat
    Keymaster
    • Topics: 56
    • Replies: 51582
    • ☆☆☆☆☆

    It is using the dividend growth formula, which (as I explain in my free lectures) gives the PV of any growing perpetuity.

    The dividend growth formula (just as with the normal discount factor for a perpetuity) gives the PV ‘now’ for a perpetuity that starts in 1 years time. Here the first flow is in 5 years time, which is 4 years later than in 1 year, and therefore the result needs discounting for 4 years in order to get a PV ‘now’.

  • Author
    Posts
Viewing 4 posts - 1 through 4 (of 4 total)
  • You must be logged in to reply to this topic.
Log In

Primary Sidebar

ACCA News:

 

ACCA My Exam Performance for non-variant Applied Skills exams is available NOW

NEW! Download the ACCA Pass Guide

FREE Verifiable CPD for ACCA Members

ACCA mock exams and debrief videos

ACCA Options:  “Read the Mind of the Marker” articles

Subscribe to ACCA’s Student Accountant Direct

Donate

If you have benefited from OpenTuition please donate.

ACCA CBE 2023 Exams

Instant Poll * How was your exam, and what was the result?

BT CBE exam was.. | MA CBE exam was..
FA CBE exam was.. | LW CBE exam was..

Specially for OpenTuition students

20% off BPP Books

Get BPP Discount Code

Latest comments

  • John Moffat on Introduction to Financial Accounting – ACCA Financial Accounting (FA) lectures
  • John Moffat on PM Chapter 13 Questions Standard Costing and Basic Variance Analysis
  • abdallah254 on FA Chapter 2 Questions The Statement of Financial Position and Statement of Profit or Loss
  • Iby2012 on Introduction to Financial Accounting – ACCA Financial Accounting (FA) lectures
  • Iby2012 on Introduction to Financial Accounting – ACCA Financial Accounting (FA) lectures

Copyright © 2023 · Support · Contact · Advertising · OpenLicense · About · Sitemap · Comments · Log in


We use cookies to show you relevant advertising, find out more: Privacy Policy · Cookie Policy