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Hi John,
1) In regards to issue costs are they always included in the NPV at time 0 as it is done in the answer to this question?
2) when the APV is determined they took the complete figure of 400,000 into consideration, wouldn’t it be better to use only the 100,000 as this is the cost of debt and the other 300,000 is cost of equity?
Thanks in advance
1. In an NPV calculation – yes 🙂
2. For APV we bring in the whole of the issue costs (whether they relate to equity or to debt) because they are effectively a cost of doing the project.
Good day sir, related to Tampem Co i realise there are very less about it in online. I would like to know the answer for it but unfortunately i cant find the final answer anywhere. Sir have discuss the question before in any free lecture?
It is not discussed in our lectures. Is there not an answer in your Revision Kit (or wherever it is that you found the question)?
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