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Hello Sir,
Staple View Division has to be done through Free cashflow Method
My question is that in the Model Answer, they have not multiplied it with a discount factor which we are supposed to do in a Perpetuity situation.
The cost of capital is 12% so shouldn’t we discount it back to year 1??
I assume that the relevant data is not present for years that’s why we cannot do it??
so thats why the model answer has done it like this below
$34·8m (1·04)/(0·12 – 0·04)Please tell me which exam session you are referring to. I am sorry, but I cannot remember the name of every question in every exam 🙂
Thanks, I have found it 🙂
Using the growth formula gives the PV now when Do in the formula is the current (time 0 figure), which is 34.8M. There is no need here to do any more discounting on the answer.
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