Thank you for the video, very explanative. i have a question, when you were solving APV, you used Beta Asset and said the new project will only use equity. This was not stated in the question. Do we just assume this?
I think it's because with APV, to calculate the base case NPV you use the ungeared cost of equity as a discount factor(hence only using equity) then consider the financing impact. This is how I understood it.
Thank you for the video, very explanative. i have a question, when you were solving APV, you used Beta Asset and said the new project will only use equity. This was not stated in the question. Do we just assume this?
Now I don't exactly remember but it must have been mentioned in question otherwise such big assumption we can not make.
I think it's because with APV, to calculate the base case NPV you use the ungeared cost of equity as a discount factor(hence only using equity) then consider the financing impact. This is how I understood it.
at 48 mins in, your referring to the deprecition charge as the book value but thats not right is it?