Ca final sfm paper

Page no : 3

Hemant Pandit (articl assistant) (284 Points)
Replied 28 May 2014

i was getting value of business as negative in que of valuation of business as per FCFF

FCFFF was also negative

Rajat Grover (article) (23 Points)
Replied 28 May 2014

@ hemant- thank u for ur reply.. Bt shouldn't average market risk premium be inclusive of value of beta as it was given "excess of market portfolio return over risk free return". Usually we multiply the value of return with beta inorder to compute portfolio return. So i took 17.5% as the cost of equity. However i ll b thankful if anyone of the members may refer the book in which this question was given, if they have solved this question before

Shikha Singhania (CA FINAL) (237 Points)
Replied 29 May 2014

Lovely paper.... Attempted all 7 question!

yet managed to finish it in 2hours 15 mins....

Expecting exemption marks....

Hemant Pandit (articl assistant) (284 Points)
Replied 29 May 2014

Originally posted by : Rajat Grover
	@ hemant- thank u for ur reply.. Bt shouldn't average market risk premium be inclusive of value of beta as it was given "excess of market portfolio return over risk free return". Usually we multiply the value of return with beta inorder to compute portfolio return. So i took 17.5% as the cost of equity. However i ll b thankful if anyone of the members may refer the book in which this question was given, if they have solved this question before

@ Rajat buddy i think you are right we should not multyply beta and accordingly the EVA will also be positive

providing beta and using the word average was a googly from the insti.

By the way where you had seen this kind of SUM??

Divya Harwani (Articled Clerk) (26 Points)
Replied 29 May 2014

My ans 1a- 104.35 1d- 10820 3a - i deducted operating expenses n even took fixed interest sec at closing value.. dunno if m right but then d ans was 25.587 per unit 3b - 1. 5242000 if no hedging n 6026000 if hedging 3b- 2. 5976500 so good if hedged 4a WACC was 17.5791 and eva I did taking 2 assumptions of net income after tax giving eva of -92551 and net income before tax eva -842551 5b loss of 228285 6b 12mth was 2.0757% and 24 month was 2.115%

deepa (querist) (28 Points)
Replied 29 May 2014

Abt eva.. I think the beta given was weighted beta...accordingly find out equity beta using appropriate weights n den use d same to arrive at ke...i don how far dis is correct...but dats wat i did...i got positive eva

deepa (querist) (28 Points)
Replied 29 May 2014

tiwari (a) (188 Points)
Replied 29 May 2014

In forex what does mean by 124 level....is it 1.24 or .124???

sangmesh (executive) (27 Points)
Replied 29 May 2014

Required answer of question of mafa Q. 1(a) Given : d0 = 4, g for next 2 yrs 20%, and thereafter 10% . Ke 15% Asked current price? Pls answer

CA Ramnandhan Ravikumar (Executive - Audit) (199 Points)
Replied 29 May 2014

Ans for Q.1(a): d0=4, d1=4.80(4*1.2), d2=5.76(4.80*1.2) and the price of the share as at year 2 is calculated using the formulae - P2=d3/ke-g (from the third year onwards we have a constant growth rate of 10%) i.e d3=(5.76*1.10)/15%-10% = Rs.126.72. Now if we discount all the cash flows at the rate of 15%, we will arrive the at the present value of the share - Rs.104.34/-

CA Abhinav (Chartered Accountant) (496 Points)
Replied 04 June 2014

@ Deepa, even if you take the beta as weighatge beta even then EVA will be negative. Please put your calcuation here so that I can tally it with mine.
@ Raunak, Can you tell me the year of FR paper in which the same EVA question came.