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Westparley Co (March 2020)

Forums › Ask ACCA Tutor Forums › Ask the Tutor ACCA AFM Exams › Westparley Co (March 2020)

  • This topic has 1 reply, 2 voices, and was last updated 1 year ago by John Moffat.
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  • February 14, 2021 at 6:20 am #610304
    lynette2010
    Member
    • Topics: 2
    • Replies: 18
    • ☆

    Hi John,

    Part b(iii) – in the computation of the total value which Westparley Co’s shareholders will gain from the acquisition of Matravers Co, it includes Less: Market value of debt(Mvd) of 6,500 million. Is this because the FCF and additional synergy computed are inclusive of debt(as they are not FCFE). Therefore, to calculate the value shareholders will gain, it is required to remove the mvd?

    February 14, 2021 at 10:37 am #610352
    John Moffat
    Keymaster
    • Topics: 57
    • Replies: 51529
    • ☆☆☆☆☆

    Yes 🙂 Discounting the free cash flows at the WACC gives the total MV (i.e. equity plus debt).

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