financing effect
※Base-case NPV : NPV without debtfinancing
※Financing effect : Effect of using debtfinancing
However, APV method needs information about the size of debtfinancing.
For now, we will use given Market ratio for calculation.
Market ratio : 34.4% of debt, 65.6% of equity
First, the beta. Which beta should we use?
Since the 60 month
- The directors voted to establish a subsidiary in Thailand
- Its initial estimates = 550 million Thai Baht(TB)
= $ 12.65 million (∵ spot rate = $0.023/TB)
- Now Blades has $2.65 million available
- The remaining $10 million (=TB434,782,609) should be obtained from other sources
- CFO prefers 'debt' to equity financing to raise the funds since Blades is a
Summary
The directors voted to establish
a subsidiary in Thailand
- Its initial estimates = 550 million Thai Baht(TB)
= $ 12.65 million (∵ spot rate = $0.023/TB)
- Now Blades has $2.65 million available
The remaining $10 million (=TB434,782,609)
should be obtained from other sources
CFO prefers 'debt' to equity financing to