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Arbitrage on exchange rates
AFM
answered on 20-Jan-25 19:32
Sir, can We 1st convert USD to GBP, which gives 13million GBP [20million USD * 0.65]. Then converting GBP to INR, which gives ₹1288.9 million [13 million GBP * 99.1]. And now converting INR to USD, gives 20098283.93 USD [ ₹1288.9 million /64.1]. So that gain will be 98283.93 [20098283.93-20000000]. Is this computation is correct?
latest answer
1/1.5530=0.644 whereas the q says 0.65 I would take rates that are more granular and detailed than rounded off Explained this in the video on the first few minutes
Malaivalar mangai
CA Final
★ 0
1
461
Provision for Doubtful debts
AFM
answered on 20-Jan-25 16:00
Sir, In assumption 1 and 2 when calculating NOPAT the increase in profit net off tax considered because of not deducting provision on doubtful debts then why it's been added again in equity while finding capital charge sir ?
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Thank you Sir
Prethivi Rajan
CA Final
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2
402
IFM - Illustration 2
AFM
answered on 19-Jan-25 21:18
Are the overheads of Rs. 5 crores not considered because the cash flows are not repatriated to India?
latest answer
Understood sir
Durai Murugan
CA Final
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2
215
IFM - Discount rate
AFM
answered on 19-Jan-25 21:19
When information like Cost of GDR, WACC is given in the question, 1. Cost of GDR is used to discount foreign currency cash flows 2. How to determine whether WACC is used to discount home currency or foreign currency cash flows? Is it solely based on location of debt funding or do we need to check out any other factors? For example, Illustration 2: Information available: 1.Debt funds are secured in Nepal (Foreign country) 2. No info about equity funding WACC is used to discount Nepal CF (Foreign country) Illustration 18: Information available: 1. Debt funds are secured in Mauritius (Home country) 2. Remaining funds are arranged by Vishwas (Citizen in Mauritius) and his friends (Resident in India based on the question ) WACC is used to discount Mauritius CF (Home country)
latest answer
Thankyou sir
Durai Murugan
CA Final
★ 470
3
291
IRRM - Illustration 12
AFM
answered on 22-Jan-25 21:50
Sir, in this question initial LIBOR rate is not given and payment on 1st interest reset date (31/12/2013) should be based on the rate on 1/07/2013 but rate on 31/12/2013 is taken for interest computation. In my understanding, the rate for the next payment is fixed now & interest along with the payoff from cap, if any will be paid after 180 days (unlike FRA, where it's discounted and paid at beginning). In the previous illustration 11 also (where the last LIBOR of 1.75% is ignored as it is not relevant), the same view is taken but this illustration contradicts the logic. Kindly clarify sir.
latest answer
Ok sir
Vigneshwar M
CA Final
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4
234
Lecture 35 - Illustration 23 - Revised PAT Computation
AFM
answered on 18-Jan-25 22:04
Sir, in this question, the shares are being bought back at a premium of 10% to the market price. Shouldn't the premium on buy-back also be deducted to compute the Revised PAT for the purpose of computing the revised EPS?
latest answer
Premium
Vignesh Panigrahi
CA Final
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319
IFM - Illustration 18
AFM
answered on 18-Jan-25 15:49
1. While calculating year 4 cash flow, can we consider working capital recovery directly as MUR 8 million which is slightly different from MUR 7.89 million (1.5402 crores / 1.9526)? 2. Is it necessary to consider working capital for the 4th year as it is will be recovered in the same year? (Impact will be 0) 3. Interest on debt isn't considered assuming loan is taken by vishwas and not aerious. But revenues & costs in real term are given excluding only the depreciation. Moreover as we using inflation adjusted cost, Is it okay to assume interest is already included in expected costs and it is calculated on inflation adjusted interest rate?
latest answer
Yes
Durai Murugan
CA Final
★ 470
4
289
IRRM - Illustration 5
AFM
answered on 17-Jan-25 20:32
In this note referring to the alternate possibility which doesn't make gain on arbitrage, deposit rate for 7-12 months is mentioned as 6.5% although rates only for 3 & 6 months are given in the question. Has it been taken from the FRA quote (6.5% - 6.75%)? Also, LIBOR is a rate at which banks will lend and it's the borrowing rate for the customer. Am I right sir?
latest answer
Thank you sir
Vigneshwar M
CA Final
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2
497
NPV Calculation
AFM
answered on 17-Jan-25 07:50
Why we are reducing growth from Ke for NPV Calculation, Ke - g is formula for the price determination? Please help me understand, Sir
latest answer
Ke-g
Dilip Kumaran
CA Final
★ 610
1
279
Forex - Illustration 77
AFM
answered on 17-Jan-25 09:58
How to interpret the txn " Draft on London cancelled" as it is in the Purchase column of the exchange position
latest answer
Yes
Vigneshwar M
CA Final
★ 2K+
3
274