标题: am i missing something? [打印本页] 作者: hanvinh 时间: 2011-7-11 17:40 标题: am i missing something?
on Pg 88 , CFA Text Book -Volume 4, in the answer to problem 23, it says MCC is estimated
by YTM on comparable outstanding.But the outstanding debt has a 9% YTM as compared to 7% in the new issue.
My question : Why is 7% YTM used for outstanding debt calculation?
Thanks!作者: scr879 时间: 2011-7-11 17:40
The weighted average cost of capital is used to determine the pv of future projects. Since the company can no longer issue debt at 9% it would not be reasonable to determine PV based on a rate that is no longer available to the company so the 7% rate is used instead (b/c it is forward looking)作者: soddy1979 时间: 2011-7-11 17:40
Thanks Anna!
Just got confused with"comparable outstanding ".
