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I remember a question where I had to ungear a quoted company to get a value, then use that value to regear our company, but I can’t remember what topic it was, where it comes up or what value I was looking for (maybe beta).
Can someone point me in the right direction as it hasn’t come up in my revision notes and I’m worried it will come up tomorrow.
Thanks.
In paper F9, you can only be asked to ungear and rehear betas (and obviously be able to calculate the cost of equity using a beta). It is the the CAPM chapter of our course notes.
Sorry to barge in on someone else’s thread, but can I ask something that’s been bugging me for a while please?!
When we convert Ba back into a geared Be, because my level of algebra is very basic, I rearrange the formula this way.
Be = Ba / (Ve / (Ve + Vd (1-T))
Although it gives the correct answer, to my mind looks very messy! The text book way looks much neater (just swap the places of Be and Ba, and turn the fraction on it’s head). For the life of me, I can’t think why that works. I’m sure I’ll remember how to arrange the formula in the exam if it comes up, but would you be able to explain to me the logic behind rearranging the formula their (and your?) way please?
Sorry if I haven’t explained myself very well! Thanks.
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chap. CAPITAL STRUCTURE. Heading CAPM and MM combined – geared betas. probably on the 3rd or 4th page after the beginning of the chap.
Revision Kit question number Q.45 ECHO CO……..Q.49. D CO…….Q.50 IML CO………Q.54 FAQ………Q55 DROXFOL CO.
few other questions too contain negligible calculations regarding Gearing UNgearing.hope this helps you. All the best and pray for me too 🙂 xx
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