ACCA I Advanced Financial Management (AFM) I Adjusted Present Value (APV) - AFM Lecture 5

[@fitmisshadijjalubega2001]

The loan amount provided by the bank when calculated should be 90,000 and not 270,000.Without brackets,BODMAS set in giving 270,000. 2:46:08.

[@vishalKumar-rl4lt]

3:25:08 we need include inflow as well as outflow in formula then we will get correct answers.

[@ajaypokhrel8977]

mam you are doing great, thank you so much

[@brigittejoycejordie8818]

I’m confused at 1:01:41 why did you not regear with the new capital structure of Rounding of 40:60 debt to equity?

[@abhisheksharma941]

Because we are calculating the base case NPV here, it has to be all equity only, so we'll not regear it and use just the asset beta. The base case NPV we need is the one that is not affected by the capital structure.

[@fitmisshadijjalubega2001]

Thank you for the lecture.Highly recommendable.

[@blackm9063]

Valuable Lecture. Thank you very much

[@keshavarora9298]

Mam i have a doubt here 21:00, can't we take our Kd( yield on debt) as our cost of debt(11%). Because in WACC formula obviously we have to do Kd(1-t)=7.7%

[@angelafriera1980]

Ma'am, why are we not multiplying the PV found by DF @ Year 1- to get the actual PV of the tax sheild?

[@blackm9063]

Highly recomended

[@umeranwer5909]

Does anybody have a online link for kit to download

[@ankitnaredi2097]

In TYU 3 why we are doing loan schedule by annual repayment of 36927 while calculating tax relief on loan interest, as in TYU we are not doing like that ?

[@bunmiobidigbo5034]

In 2:58:11 pls why was AF of 10% used for the bank loan instead of 16%

[@shauki123]

16% is the cost of equity (Ke) so it cannot be used for the bank loan, for the bank loan only cost of debt is used which is 10%. Also for the subsidised loan we must use the general interest rate (10%) not the subsidised interest rate (3%) because that amount of subsidised debt can still be reinvested at risk free rate and also subsidised interest rate doesn't reduce the risk associated with a debt.

[@CAStudent.Official]

👍

[@prosecutor17]

In last example, why tax relief lost was absent?

[@prosecutor17]

During calculation of Interest saved on subsidised loan in simple example there were no adjustment to after tax, but in last complicated question, the PV of interest saved has been adjusted for after tax. Please can anyone explain?

[@jesseshava5572]

thank you

[@Champingcom]

Thanks

[@syce]

Ma'am, instead of formatting cells individually to adjust numbers to 0 (zero) decimals, we can just select all cells by using ctrl + a and adjust numbers to 0 decimals by default or we can select the area & do the same. It will save a lot of time. Also, much appreciated for providing free lectures to us.

[@SabiAkther]

Thank you providing this valuable tip. I will introduce this in my next lecture 🙏