[vuvietquang90]

Thank you very much !! Very clear cut!!!

[vuvietquang90]

Could you answer me please?

[vuvietquang90]

Hi sir, please reply me

[vuvietquang90]

So 1.6 is the dividend will pay in this current yr but defferring until 3rd yr?
Ok i see thank u sir

[vuvietquang90]

Thank u very much. Of course both of them are simultaneously used at the same time.
Can u refer to GXG ques – 06/2013, please explain for me part (a)

The answer is
The co. Capital value at end of yr 2:
2.5 /(0.09 -0.04) = $50m ( agreed)

The capital value of the dividend at yr 0:
50/1.09^2 = $42.1m (agreed)

The current PV of dividends to shareholders, using the existing 3% dividend growth rate:
1.6×1.03 / (0.09-0.03) = $27.5m

I wonder where is the 1.6 come from?
Another thing:
Is that 4% is the dividend growth from 3rd yr onwards? And 3% is backwards?

[vuvietquang90]

Ok so before tax cost of debt is the rate of return required by investors and after tax cost of debt is the rate of return required by who? A company?

[vuvietquang90]

Yes i do. Thank u very much

[vuvietquang90]

No its not what i meant.
What im saying is which subject includes price/ earning ratio method? Please send me link of that lecture

[vuvietquang90]

Which subject should i focus? Can u send me the link?

[vuvietquang90]

Ok just the different wording makes it difficult to understand.
We use after tax cost of debt as discount rate also called yield rate & return to investor which is 12% (before tax)
Therefore 12% need to be converted to post tax
8% is used to calculate cost of debt by the trial-and-error method right?

[vuvietquang90]

Ok, I understand your first paragraph, meaning that buying back happened after the accounts published, not during this yr. Therefore it will only affect the next yr financial affair

[vuvietquang90]

In part c of this ques. Why dont we take into account the revised retain earnings?

If buying back bonds that means
Revenue: 472
Less cos : (423)
Pbit: 49
Interest: (125-80)*8% = 3.6
Pbt : 49-3.6 = 45.4
tax (30%) : (13.62)
Pat: 31.78 ( goes to retain earnings)
Revised RE = 80-27+31.78= 84.78
Revised total equity = 60+$6*15+84.78 = 224.78

Can u explain for me this point?

[vuvietquang90]

im still confuse maybe not yet study about exchange rate. Ex rate is obviously not under control of managers

[vuvietquang90]

“…then if the exchange rate changes it may mean they are able to export much more and make more profits…”

Im thinking 2 perspectives in your example 2

Being able to export much more and make more profits to service market demand ( is it market demand relate to decision-making of the managers? i think if the co. has a good products as well as a good price then it will gain a foothold
My second viewpoint : producing more goods is also a decision of managers enabling to export more

[vuvietquang90]

That’s right :)) thank you sir

[vuvietquang90]

sorry about that. Im afraid that u forgot to answer my ques so its just a remind
Thank you for ur answer. Im very clear how flotation works

Another question that i still need ur help
can u explain for me this sentence, i came across several times but not quite understand in deep about this

“. .. from this perspective, a dividend increase should arise from increases maintainable profitability, not from a desire to ” make the company more attractive”. Increasing the dividend will not generate any additional capital for company, SINCE EXISTING SHARES ARE TRADED ON THE SECONDARY MARKET”

What is the secondary market and what is the meaning of this sentence

Thank u very much

[vuvietquang90]

Can u answer me please

[vuvietquang90]

Got it. It’s Unrealisable gain

[vuvietquang90]

i don’t quite understand about this. So it assumes that if the share price go up by 0.7, then the shareholders are entitled to receive this incremental too?

[vuvietquang90]

SORRY ABOUT THAT

[vuvietquang90]

yes, thank u sir
I will watch it

[vuvietquang90]

c.o.c means cost of capital
What i mean is
WAC = (Cost of capital + cost of borrowing)/2

[vuvietquang90]

In a question Warden Co. in BPP kit revision. Part (c) (ii), it asks to calculate sensitivity in selling price

Sensitivity = NPV / PV of sale revenue

the answer is
Taxation is taken into account to calculate sale revenue after tax

Why should we need to take into account taxation in this circumtance?
I though only sale revenue is enough

Another thing i want to ask you about the sensitivity analysis to c.o.c
Is that Sensitivity to c.o.c = irr
Or we calculate like this

Sensitivity to c.o.c = (irr – c.o.c) / c.o.c x 100

I found somewhere use first method and another use second. That very confusing. Please make clearly for me sir

[vuvietquang90]

Yes i got it. I forgot that using weighted average c.o.c for discounting
Therefore
WAC = (c.o.c + cost of borrowing)/2

[vuvietquang90]

Ok i understand.
thank u for your kind

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