Forums
ADR
AFM
answered on 20-Jun-24 16:01
Hi sir, can an Indian company list in NYSE other than through ADRs ?
latest answer
No
B. Dinesh
CA Final
★ 3K+
1
404
Working capital
AFM
answered on 20-Jun-24 15:20
Hi sir, at the end of year 5 we are getting all the working capital back in this question. Do in real life if we invest in any international projects , do we receive our working capital back ?
latest answer
yes
B. Dinesh
CA Final
★ 3K+
1
454
After tax cost of Kd and Ke
AFM
answered on 20-Jun-24 15:18
Hi sir, while computing WACC we took after tax cost of equity and after tax cost of debt. Do Everytime we compute WACC should we consider only after tax costs or anything particular in this question that make us convert to after tax cost ? If we have to take after tax in every question, if they did not mention anything, then can we assume whatever cost they gave as after tax cost ? It's been long time i study the capital budgeting so i forgot. please clarify.
latest answer
Yes. That is ideal. But unfortunately in a lot of questions ICAI is just not clear whether return is pre or post tax . If tax is also provided and they do not specifically mention Ke is post tax, always provide an assumption / addtl working for both post and pre tax cost
B. Dinesh
CA Final
★ 3K+
1
554
Overhead cost
AFM
answered on 20-Jun-24 15:20
Hi sir i am having a doubt regarding overhead, please clarify the same . Is the overheads of NPR 5 crores that they mentioned in the question is ' Expense incurred by Head office in India and apportioned to Nepal project ' ?
latest answer
yes
B. Dinesh
CA Final
★ 3K+
1
331
Not hedging
AFM
answered on 19-Jun-24 19:53
Hi sir, Because we did not hedge in part 3 and INR appreciates and depreciates. the final loan repayment will change so we considered that for loss computation. And every year we will pay interest also, so bcz of currency rates change our interest also changes . So we should consider interest change effect also for computing loss right sir ?
latest answer
They specifically send the exchange rate is changing only at period end. Not during the loan tenure. Int is paid during loan tenure - except for last int payment - you can consider it only for last int payment - But here the intent of the question does not appear to be that
B. Dinesh
CA Final
★ 3K+
1
371
Interest rate
AFM
answered on 20-Jun-24 11:09
Hi sir, instead of discounting with the post tax interest rate(6.2 %*0.70) as shown in the end. can we simply assume the interest rate of 6.2 % as post tax interest rate ? If we assume so, do any of the workings in the part 1 or part 2 will change ?
latest answer
Yes. Usually post tax rates have to be used. The rates quoted in market are pre tax. you have to necessarily reduce tax from market quoted rates. You cannot assumed market rates as post tax
B. Dinesh
CA Final
★ 3K+
3
394
Discounting factor
AFM
answered on 19-Jun-24 19:50
Hi sir, for the last 2.5 years interest rate is 6.5( 5.75+75bps) and our cost due to of swap is (5.75+45bps)is 6.2. Here interest rate is different and our cost is different. Bcz 6.5 is prevailing interest rate that we pay to bank, can we consider this rate for discounting cashflows ?
latest answer
Good point. I I am evaluating savings from a loan I would rather use the loan rate than any other rate. My cost of funds is 6.2 and not 6.5 so i woudl use 6.2 only
B. Dinesh
CA Final
★ 3K+
1
320
All in cost
AFM
answered on 17-Jun-24 19:56
Hi sir, In the question they mentioned " P ltd., a dealer, quotes 'All in cost' for generic swap ". what is meant by 'All in cost' ? Is it fixed interest rate? and Is it fixed interest rate in just this illustration context or in any other question if they use 'All in cost' should we consider it as fixed rate only ?
latest answer
All in means without any additional fees - including all interest payments to be made in respect of this loan All in diff contexts can mean either fixed on variable. In this question it means fixed cost
B. Dinesh
CA Final
★ 3K+
1
470
Why we consider only FCFF
AFM
answered on 17-Jun-24 19:54
Is how can we identify that we should Only FCFF here??
latest answer
Pls be specific - which Q no?
Surya Prakash
CA Final
★ 19K+
3
400
profit/ loss in futures
AFM
answered on 17-Jun-24 16:09
Hi sir, In futures when interest rate is 4.5% we will sell future @ 94.15 and bought back @95.5. So the loss is 1.35 Euros (94.15-95.05). But why we took 1.35 %, isn't it 1.35 Euros loss for 1 future ?
latest answer
On a FV of Euro 100, loss of 1.35% is 1.35 Euro
B. Dinesh
CA Final
★ 3K+
1
378