EXAM FEEDBACK EVA (M) 2015 Semester 1
Question1
a. Most of the students did very well on FCF calculation. Very few students
determined FCF by concentrating on cash distribution to shareholders and
debt holders, which is quicker to determine. Inventories n

TUTORIAL 9: TAKEOVERS
PROBLEMS
Q1 BHP Billiton Takeover of WMC 2005
a) Determine the value of the merged firm (assume Rf = 5% and Rm Rf = 7%). Assume
that the Independents valuation of the target represents its intrinsic value.
Value of Bidder
VB Share Pr

TUTORIAL 1: INTRODUCTION TO VALUATION- FINANCIAL MATHS
(REVISION)
PROBLEMS
Q1 Answers rounded up (down)
Using formulas for annuities, perpetuities and Gordon Growth formula rate
a)
b)
c)
d)
$578
$492
$626
80/.10 = $800
e) =$1,177
f) Cannot be solved since

TUTORIAL 4: ESTIMATING FREE CASH FLOWS
DISCUSSION QUESTION
PROBLEMS (do questions 1- 4 )
Q1
Statement of Cash flows- current period CSR
Cash flow from operations
(Indirect Method)
Net Income (Parent S/H)
Depreciation
Decrease in current assets (excluding

TUTORIAL 2: INTRODUCTION TO VALUATIONS- FINANCIAL MATHS
(ADVANCED)
DISCUSSION QUESTIONS
Q3 The H-Model assumes that growth begins at some super-normal rate, and then the growth
rate declines in a linear fashion until it reaches the normal rate (long run s

TUTORIAL 8:Market Based Valuation
PROBLEMS
Q1
CSR
Boral
Basic weighted average no of shares
505.422m 719.742m
Diluted weighted average no of shares 505.422m 722.845m
Q2 Determine the following ratios for both CSR and Boral.
Supporting calculations CSR
Est

TUTORIAL 5: FUNDAMENTAL ANALYSIS
PROBLEMS
Q1 Required:
1)
2)
3)
4)
Year 6
Year 7
Year 8
Year 9
Year 10
$1,308
$1,426
$1,554
$1,694
$1,846
How would your answer change if you were expecting inflation in year 6 to be 5%?
Should use real growth rate of 5.7%

EVA
2012 S2
Page 1 of 2
TUTORIAL 10: FINANCIAL DISTRESS, CROSS
SHAREHOLDING AND PRIVATE COMPANIES
DISCUSSION QUESTIONS
Q3 From the following data on Lion Nathan takeover bid for Coopers Brewery 2005
use the P/E ratios to estimate an illiquidity discount a

EVA Additional Questions
Topic 1 Financial Math
Calculate the value today of a security that promises the future expected cash
flows beginning in year 1, assuming a discount rate of 12%
(a) Growth rate in cash flows of 3% pa in perpetuity. Cash flow for y

TUTORIAL 2: INTRODUCTION TO VALUATIONS- FINANCIAL MATHS
(ADVANCED)
DISCUSSION QUESTIONS
Q3 The key limitation to the H model is that the mathematics is only an approximation of the
cash flows and therefore not accurate. A two stage model approach would pr