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John Sir,
Please clarify for me.Dec 2005 Sleepon
1.Appendix 2, for calc of MIRR , multiflier at 11%, where do you get the figures for the years.2. Appendix 3 , same ques , duration % of total PV 1.0%, 2.4%, 3.3% etc (how do we get these %) formulae please
3. How many Formulae do we have for WACC. and when to use them? one company, 2 company .when we have gearing etc..
Thanks
1. I assume you are using BPP’s answer (because the original exam question did not ask for the MIRR). 11% is the WACC calculated in workings 5 of appendix 1. (I don’t know why BPP has used this method, when the formula for the other method is given on the formula sheet and gives the same answer).
2. They are %’s of the total of the PV’s.
3. There is only one way of calculating the WACC and you don’t need a formula (the formula on the formula sheet does not work then it is redeemable debts, as it usually is)! It is the weighted average of the costs of each source of finance, weighted by the total MV of each source of finance.
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