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Question from Chapter Investment decision
Financial Management
answered on 23-Jan-24 14:39
Illustration No: 25 Sir, while computing IRR , from PVIF @20% we got the answer negative Rs.15,250. But still you compute CF using another Interest factor I.e, PVIF @15% and got the IRR as 17.6%. But I did the solution just compare with PVIF @ 10% and 20% only and answer comes to 17.78% as IRR. There is a slight difference in answer that is 0.18% . Is it correct ? Can we do so ?
latest answer
The upper and lower bounds should be as close as possible you cannot do 10 and 20; you have to be closer.
Sindhu H M
CA Inter
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327
Auditing
Auditing
answered on 22-Jan-24 23:06
What's meant by auditing,what is the need of this
latest answer
Its examination of financial statements, whether they give true and fair view. its done to enhance the confidence of stakeholders
Mukkanna K
CA Inter
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1
192
Beta
AFM
answered on 22-Jan-24 18:24
What is the difference between leveraged beta & unleveraged beta? Whether asset beta & leveraged beta are same? Also how to identify in the question that the beta of debt be zero?
latest answer
The inclusion of debt beta in the computation of the asset beta is to account for the financial risk that the debt adds to the firm's equity. The formula you've shown adjusts the equity beta for the effect of financial leverage (debt). Here's the reasoning: equity Beta : This is a measure of the risk of a company's equity relative to the market. It is "leveraged" because it reflects not just the business risk but also the financial risk due to the company’s debt. Debt Beta :This represents the risk of the company's debt also relative to the market. Generally, the debt of a company has some risk (though it's usually quite low compared to equity), especially if the interest rates are variable or the company's ability to meet its debt obligations is uncertain. Asset Beta : This is the unleveraged beta, reflecting the company's business risk without the effect of its capital structure. It is what the company's equity beta would be if it had no debt. When you adjust the equity beta for the impact of debt, you essentially strip out the financial risk to get the pure business risk (asset beta). Even though the debt beta is often low, especially for stable companies, it's not zero because debt holders require a risk premium above the risk-free rate, albeit much smaller than equity holders. Therefore, the formula provides a way to calculate the asset beta by considering both the equity beta and the proportion of debt adjusted for tax benefits, along with the debt beta to reflect the small amount of market risk associated with the company's debt. The tax shield (D(1-t)) is included because debt interest is tax-deductible, reducing the cost of debt and thus affecting the overall cost of capital.
VISAAGAN R
CA Final
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3
664
Form 112
Others
answered on 23-Jan-24 09:28
I had not completed any graduation degree. I am planning to register bcom in IGNOU ( as per MOU between IGNOU and ICAI) .. I had to apply for articleship under new scheme within 2 days .. Please guide me on how to apply for bcom under IGNOU. Is it possible to register for bcom and articleship within 2 days?
latest answer
Yes, you can do so.
Sajeetha R
CA Final
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2
337
Residential status qstn 6
Direct Taxation
answered on 30-Jan-24 14:25
I got Mr X residential status as Non resident bcoz of deemed resident provision . Is it right?
latest answer
There are extra questions in material for practice. In AY 24-25, he will be ROR since he can satisfy second basic condition and both additional conditions together. AY 23-24, he will be NR since he cannot satisfy 182 days condition.
1 Minute Review
CA Inter
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5
396
Residential status
Direct Taxation
answered on 30-Jan-24 14:16
I got Mr X status as Not ordinary resident. Is it right?
latest answer
RNOR. Additional condition is not satisfied.
1 Minute Review
CA Inter
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370
Residential status
Direct Taxation
answered on 23-Jan-24 12:48
In this qstn I answered Mr X is a ordinary resident. Is it right or not ?
latest answer
He is non resident since he does not satisfy the basic condition itself.
1 Minute Review
CA Inter
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434
Residential status
Direct Taxation
answered on 22-Jan-24 14:39
My answer was Mr.X is an ordinary resident. Is it right or not ?
latest answer
Welcome
1 Minute Review
CA Inter
★ 405
4
1K+
Adjusted present value model
AFM
answered on 22-Jan-24 14:49
Why can we do levered firm value - expe Ted bankruptcy cost.
latest answer
Right
Hrishikesh Pradhan
CA Final
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2
400
Doubt Regarding Profit
AFM
answered on 22-Jan-24 14:16
Dear Sir, When we have Pounds 62500 and when we sell the pounds for dollars it would be $ 80100 (USD) and now we purchase back Pounds @ 1.2806 that would be 62548.80 Pounds with a gain of 48 pounds. Is this conceptually incorrect?
latest answer
Markets are not always efficient - there may always be pockets of inefficiency. However, with advent of technology and algo trading, all such inefficiencies are exploited immediately if any and no such aribtarge opportunities openly exist in today's world
Vanacharla Sai Pavan Kumar
CA Final
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2
303