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Doubt
AFM
answered on 01-Jul-24 10:35
so, is it better to borrow from CAD (since have to repay only 999.16 usd), and invest it in US, since return is 1006.25. so the arbitrage benefit is 7.09. am I right ?
latest answer
Yes
ezy pan
CA Final
★ 130
1
356
NOT UNDERSTOOD
AFM
answered on 30-Jun-24 19:45
Could you please prove it with the results.
latest answer
That is using concept of bootstrapping Explain d in security valuation bonds chapter in detail Pls have a look
ezy pan
CA Final
★ 130
3
343
Net Realizable value Method
AFM
answered on 28-Jun-24 22:44
Hi sir, in NRV method we took Book value as 450 cr. It is book value of total assets only right ? or is it book value of Equity ?
latest answer
nrv is of assets valuation of a co. is nrv of net assets
B. Dinesh
CA Final
★ 3K+
5
440
debt and equity
AFM
answered on 28-Jun-24 10:18
In proposal 1 we got Assets as 19.5, so liabilities will also be equal to 19.5. So equity we have taken as 19.5*3/5. So we are assuming here that in liabilities side there won't be any current liabilities, but in liabilities there will be only debt & Equity ?
latest answer
Yes
B. Dinesh
CA Final
★ 3K+
3
410
Debt Equity Ratio
AFM
answered on 23-Jun-24 21:44
Hi sir, the debt equity ration given in the question is X pvt Ltd 's Debt Equity ration only right ? Not the average debt equity ration of the industry right ?
latest answer
yes it is company DE
B. Dinesh
CA Final
★ 3K+
1
433
Exam POV
AFM
answered on 22-Jun-24 20:21
Suppose, similar question come in exam, should we follow only ICAI approach?
latest answer
This is a poor quality question These days ICAI is asking bad questions in derivatives and PM and not in security valuation I hope they don’t ask these kind of questions However if they do ask pls follow icai methodology
Raviteja Kusumanchi
Qualified CA
★ 42K+
1
276
Real rate
AFM
answered on 22-Jun-24 14:06
Hi sir, by looking at the cost of capital of 8 % and inflation rates in US and India as 8 &9 respectively, How could you able to tell whether it is Real rate or nominal rate ? Is it bcz the cost of capital has to be more than the inflation rate ?Please explain, bcz in exam if they give data like this we can write a proper assumption to support our answer.
latest answer
real + inf = nominal if inf is 9 & Kc is 9 then kc is real because if kc is nominal. real cannot be 0
B. Dinesh
CA Final
★ 3K+
1
391
Investment and working Capital
AFM
answered on 21-Jun-24 12:44
Hi sir, the working capital for the project is 50 and for export is 15. So the incremental working capital is 35. We will receive this 35 in 5th year so bring it to Day 0. But why we reduced 15 from 550 of original investment ? we already given the effect of 15 in incremental working capital inflow right ? please explain the last 2 steps i.e. Net investment Outflow and incremental working capital inflow
latest answer
You invest 35 on day 0 and get back 35 after year 5 We have done that only 550 includes 50 from that we adjusted 15 so net investment is 535 recoup of wc is also 35 Not sure what is your doubt here
B. Dinesh
CA Final
★ 3K+
1
451
Cash flow
AFM
answered on 21-Jun-24 12:47
Hi sir, In question they have given real CF in INR and real CF in Rand. which means the CF INR is belong to XYZ ltd Indian company, so this should not form part of evaluating the African project right ? Or else should we interpret it as, in Africa stores itself we received some INR CF and some Rand CF ?
latest answer
The project generates cf in india and cf in africa. Eg manufacture something Africa - sell something there, send some of it to india - value add happens in india - there can be a variety of ways in which it works. Please don't over complicate questions
B. Dinesh
CA Final
★ 3K+
1
331
Calculation
AFM
answered on 21-Jun-24 00:59
In this question, if we use the given swap ratio to calculate no. of shares we get 6Lacs*0.5 = 3L shares, due to which the answers varies at MPS of INR 220 instead of INR 226.16 as solved. So would such rounding off be accepted by ICAI or should we follow the suggested solutions?
latest answer
Please ignore, have understood the mistake
Priyanka Udeshi
CFA L1
★ 14K+
1
268