Let’s consider an example where we have Re =16%, D1=50 and g=6% (from 2nd yr to infinite). In this we’ll discount D1 by 16-6 i.e 10%. I understand that for YEAR 2 and beyond, required return is off set by ...

Why we take pre-cost of debt for discounting cash flows in case of Adjusted NPV approach, where as in all other cases, we use post-tax cost of debt for discounting ?? Please anyone can give me the logic behind this ...

Following information is given in respect of WXY Ltd., which is expected to grow at a rate of 20%p.a. for the next three years, after which the growth rate will stabilize at 8% p.a. normal level, in perpetuity.

Sir apne btaya tha ki P0 = D1/Re-g ki 2nd explanation mein ki iss formula mein g ka mtlb hai capital gains yield and agr hm isko Re mein se htaa denge to Dividend alone se hm kya expect kr ...

In the solution even creditors have been treated as external liabilities and deducted from the PV of FMP. Is the treatment correct?      

Why can’t we solve  P4  by the help of formula P4 = P0 (1+g)power4