- This topic has 1 reply, 2 voices, and was last updated 8 months ago by
John Moffat.
John Moffat.-
Posts
-
SKB11
- Topics: 1
- Replies: 1
- ☆
I wrote the September afm and there was a question about finding wacc and cost of equity but this time there were 2 proxy companies. How do you find asset beta?
How to you solve this.
It is probably reason I didn’t pass
John Moffat
- Topics: 57
- Replies: 49583
- ☆☆☆☆☆
It is difficult for me to answer without having seen the question (maybe it will be one of the sample questions that will appear on the ACCA website after the December exam).
However it depends what type of business was being appraised and you would use the proxy company that was in the same business.
If the question was appraising a company that operated in two types of business then you would take the asset betas of proxies for each of the two types and then take the weighted average, as explained in my free lectures.
Other than that I cannot say any more because of not having seen the question.
SKB11
John Moffat- You must be logged in to reply to this topic.