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1. For national why is not shown as an option for disposing of parts of Staple Group ?
2. For Stable View, calculation can I calculate as below ?
PBIT = 73.30
Tax = 22 (30%)
Add NCA = (12.5)
Increase in working capital = (6.2)
Free cash flow = 32.60
PV(because all are based on last year figure so x 1.12) = 36.51 (32.6 x 1.12) and perpetuity is 474.66
32.6 x 1.04 / (0.12 – 0.04) = 474.66Therefore total is 511.17
3. Shouldn’t the figures in the answer sheet take into consideration of the time value of money since all the figures shown in the question are based in last year figure
4. Am i allowed to use pre tax profit figures ?1. Because the question does not give it as an option (it regards the ‘Daily Staple’ as a central element of the groups future.
2. The question specifically tells you the post tax cash flow!!
3. The answer does take into account the time value of money – that is what using the dividend valuation formula is doing!!!!
We can use the dividend valuation formula for any inflating perpetuity, but just as Do is the current dividend when using dividends, it is the current cash flow that is relevant.4. see (2)
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