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CAP 2 SFMA ASSESSMENT 2010

24567

Comments

  • Closed Accounts Posts: 44 MAX72


    flashtash wrote: »
    Appreciate that Max. I wasn't sure of the MV's. I was using the 1000 for the Ord Share so that was my main confusion. The other figures you used were the same as mine (I've since corrected the others from what I posted first). My WACC is now 15.54%. My Redeem Debs are only 12.6% v your 13.7%.


    Re Redeem Debs

    You used a value of 97 in yr 0 and then 97 less tax.

    I assume that this is 290/3 = 96.666666666

    I used 290 in yr 0 and cash out flows in yrs 1&2 of 39 less 7.8 (tax). In year 2 out flow of 300. The rounding you used might be contributing to the difference. Want do you think??


  • Closed Accounts Posts: 3 s.m.c


    My answer for the WACC is as follows:
    Ordinary Shares 18.65%
    Pref Shares 5%
    Irredeemable Debentures 8%
    Redeemable Debentures 12.11%

    WACC 15.51%

    There seems to be differences in the figures for redeemable debentures
    My workings were as follows:

    Year cashflow discount(5%) PV Discount(10%) PV
    0 96.66 1 96.66 1 96.66
    1-2 (13(1-.20)) 1.859 (19.33) 1.735 (18.04)
    2 100 .907 (90.7) .826 (82.6)


    PV of (13.37) and (3.98)

    Kd = 5 + 13.37(5)/9.39

    Kd = 5 + 7.119

    Kd = 12.11%


    My workings for WACC are:

    2100(18.7%)/2100+240+400+290 + 240(5%)/3030 + 400(8%)/3030 + 290(12.11%)/3030


    =15.51%

    Anyone Agree/Disagree with this?


  • Closed Accounts Posts: 3 s.m.c


    MAX72 wrote: »
    I think you may need to look at some of your MVs

    Ordinary share 2,100 ie 4.20 x 500 (not 1000 thats book value)
    Pref 240 ie 6 x 40 (not 200 thats book value)
    Irred 400 (not 440 as that includes interest)
    Redeem 290 (thats what I used)

    Would like an opinion on this..........


    I agree with you. I used the same MV. See my answer above.


  • Closed Accounts Posts: 11 Masjanja


    s.m.c wrote: »
    My answer for the WACC is as follows:
    Ordinary Shares 18.65%
    Pref Shares 5%
    Irredeemable Debentures 8%
    Redeemable Debentures 12.11%

    WACC 15.51%

    There seems to be differences in the figures for redeemable debentures
    My workings were as follows:

    Year cashflow discount(5%) PV Discount(10%) PV
    0 96.66 1 96.66 1 96.66
    1-2 (13(1-.20)) 1.859 (19.33) 1.735 (18.04)
    2 100 .907 (90.7) .826 (82.6)


    PV of (13.37) and (3.98)

    Kd = 5 + 13.37(5)/9.39

    Kd = 5 + 7.119

    Kd = 12.11%


    My workings for WACC are:

    2100(18.7%)/2100+240+400+290 + 240(5%)/3030 + 400(8%)/3030 + 290(12.11%)/3030


    =15.51%

    Anyone Agree/Disagree with this?


    I totally agree, got my WACC of 15.56%, the workings are almost identical to urs, slight difference in roundings i believe.


  • Registered Users Posts: 274 ✭✭eoin99


    I got my WACC to work out at 15.55%. Pretty similar to most people here. The difference is probably due to rounding & I used a slightly diff method to get the cost of redeemable debentures from my college notes. I'd imagine there would be a reasonable range of anwers accepted for the WACC calculation though.


  • Closed Accounts Posts: 11 Masjanja


    Coldplayer wrote: »
    Guys for the second point on Material FG

    Is it not just the scrap value that we use. If you look at the wording it says "could have been used" not "could be used" as a replacement material for another contract.

    The opportunity to plug it in at €5 per kg is gone surely?/

    Is anyone else agree with this suggestion? Are they seriously trying to catch us out on the wording? As a not native speaker I would never even notice it, if not u mentioned.


  • Closed Accounts Posts: 4 martina16b


    John_P_C wrote: »
    lol! ye me too! Some xmas this is!

    For the WACC part of the question; I was wondering will they ask us the impact of the three financing options on the company's share price and gearing etc. Not sure will it be a straight forward WACC question?


    Hi there I am new to this was just wondering If you know how they will bring in the three sources of finance on last page of case study into the WACC . Will we have to work out each individually using the WACC.


  • Registered Users Posts: 274 ✭✭eoin99


    martina16b wrote: »
    Hi there I am new to this was just wondering If you know how they will bring in the three sources of finance on last page of case study into the WACC . Will we have to work out each individually using the WACC.

    I've calculated an updated WACC for each scenario:
    1. 14.21%
    2. 15.82%
    3. 15.86%

    Anyone else calculated these & got similar answers? ( I was working off 15.55% as my original WACC)

    On the theory side I suppose you could be asked the pro's/con's of each, issuing shares/increasing debt. Any other suggestions?


  • Closed Accounts Posts: 44 susie-q


    tywy wrote: »
    That should be -10,000 for material CX because they're saving the cost of disposal if the project goes ahead...

    For material FG, that should be €20,000 replacement cost because they will get a scrap value of €1 per kg if the project goes ahead... so the replacement cost is €4 per kg.

    For the unskilled labour... the contribution per hour is worked out using the hourly rate so you just used the contribution to calculate it... So it should be €60,000.

    Looking back on my college notes I have relevant cost of materials will be the greater of alternative use value or the net realisable value. So for the case of FG would this not be the greater of scrap value €1 and replacement value €5.?
    i.e. 5000 kg x €5 = €25000??


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  • Closed Accounts Posts: 4 martina16b


    eoin99 wrote: »
    I've calculated an updated WACC for each scenario:
    1. 14.21%
    2. 15.82%
    3. 15.86%

    Anyone else calculated these & got similar answers? ( I was working off 15.55% as my original WACC)

    On the theory side I suppose you could be asked the pro's/con's of each, issuing shares/increasing debt. Any other suggestions?


    I was also thinking they could ask the gearing ratio using the book values and the market values. Just calculating adjusted WACC Now will get back to you.


  • Registered Users Posts: 120 ✭✭Coldplayer


    Hey guys what figures are you using for redeemable debentures cost in the adjusted wacc Option 1


  • Registered Users Posts: 8 wannabe_auditor


    Why are people not including the cost of the skilled labour? Just because it is available doesn't make it free. I mean the replacement materials are available but will we still incur a cost to replace them. So surely we must apply the same logic again and incur a cost for labor used.

    What are people doing with the contribution, seen as though it is from another contract are we to ensure that contribution gained from this contract is greater and therefore justify the removal of the unskilled labour from the previous contract?


  • Closed Accounts Posts: 10 hawai09


    hi guys cant believe the amount of hits on this site already!
    just wondering if anyone got an expected loss of €11,000 a group of us just brain storming here not too sure if we are on the right track all comments appreciated!


  • Registered Users Posts: 120 ✭✭Coldplayer


    Why are people not including the cost of the skilled labour? Just because it is available doesn't make it free. I mean the replacement materials are available but will we still incur a cost to replace them. So surely we must apply the same logic again and incur a cost for labor used.

    What are people doing with the contribution, seen as though it is from another contract are we to ensure that contribution gained from this contract is greater and therefore justify the removal of the unskilled labour from the previous contract?

    the reason you wouldnt include the cost of the skilled labour is that its a cost that would be incurred irregardless of whether the job is took on. its really only incremental costs that should be considered.


  • Registered Users Posts: 120 ✭✭Coldplayer


    hawai09 wrote: »
    hi guys cant believe the amount of hits on this site already!
    just wondering if anyone got an expected loss of €11,000 a group of us just brain storming here not too sure if we are on the right track all comments appreciated!


    i got a gain of 8000 but i seem to be the only sod with a gain.

    Material CX (4000 Kg)- 10,000.00 Materials FG (5000 Kg) 5,000.00 Materials NF (10000 Kg) 170,000.00 Skilled Labour (200 Hours) - Unskilled Labour ( 400 Hours) 76,000.00 Variable Overheads 8,000.00 Fixed Overheads 18,000.00 Contract estimation - Engineers Fees 25,000.00 Headquarter Costs 20,000.00 -


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  • Closed Accounts Posts: 10 hawai09


    Coldplayer wrote: »
    i got a gain of 8000 but i seem to be the only sod with a gain.

    Material CX (4000 Kg)- 10,000.00 Materials FG (5000 Kg) 5,000.00 Materials NF (10000 Kg) 170,000.00 Skilled Labour (200 Hours) - Unskilled Labour ( 400 Hours) 76,000.00 Variable Overheads 8,000.00 Fixed Overheads 18,000.00 Contract estimation - Engineers Fees 25,000.00 Headquarter Costs 20,000.00 -



    this is what we had
    Material CX (10,000)
    Material FG 20,000 - we were unsure about this
    Material NF 170,000
    Skilled labour 0
    Variable o/h 12,000 (€20 x 600 hours in total)
    Fixed o/h 18,000
    Contract 0
    engineering fee 25,000
    headquarter 0 ( assuming already incurred not very clear)


  • Registered Users Posts: 120 ✭✭Coldplayer


    yeah i clearly didnt see that with regards to the variable overheads. everyone else seems to have left it at 8000 though, maybe someone could give their reasoning

    I used the scrap value for the material FG as it seems to be the only remaining alternative.


  • Registered Users Posts: 8 wannabe_auditor


    Coldplayer wrote: »
    the reason you wouldnt include the cost of the skilled labour is that its a cost that would be incurred irregardless of whether the job is took on. its really only incremental costs that should be considered.

    not really cos if the project doesn't go ahead you won't use that labour at all and therefore pay nothing. perhaos i'll jus include a note with my assumption. i.e that the labour is simply available and that no cost has been incurred to date


  • Closed Accounts Posts: 11 Masjanja


    hawai09 wrote: »
    this is what we had
    Material CX (10,000)
    Material FG 20,000 - we were unsure about this
    Material NF 170,000
    Skilled labour 0
    Variable o/h 12,000 (€20 x 600 hours in total)
    Fixed o/h 18,000
    Contract 0
    engineering fee 25,000
    headquarter 0 ( assuming already incurred not very clear)

    For Material CX there is only 2 reasonable options: 25000 and 5000. I initially put 25,000 (5,000kg *£5), as it is better alternative to use the material as oppose to scraping it. Then someone suggested that the wording 'could have been used as a replacement material' implies that this option is no longer available. Now I am confused, which one of them 25,000 or 5,000, but definately not the 20,000!


  • Closed Accounts Posts: 11 flashtash


    susie-q wrote: »
    Looking back on my college notes I have relevant cost of materials will be the greater of alternative use value or the net realisable value. So for the case of FG would this not be the greater of scrap value €1 and replacement value €5.?
    i.e. 5000 kg x €5 = €25000??

    that's exactly what i was thinking!


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  • Closed Accounts Posts: 1 erinsgirl


    Hi.

    Can anyone tell me the method they used to actually calculate the costs of equity and debt?

    The methods I learnt in college are completely useless in this case.


  • Closed Accounts Posts: 451 ✭✭seven-iron


    Hi.

    Can anyone tell me the method they used to actually calculate the costs of equity and debt?

    The methods I learnt in college are completely useless in this case.

    i thinks its the same.
    wacc is wacc motha fúcka


  • Closed Accounts Posts: 10 hawai09


    has anybody looked into either if the above yet?


  • Registered Users Posts: 64 ✭✭barrystealover


    Can u elaborate the kd part in relation to how you got the market value excl interest(80).Could you also elaborate on the Kp how u got the Dividend(.30) and the market value ex Divident(6.00).am a bit rusty.tahanks


  • Closed Accounts Posts: 44 MAX72


    s.m.c wrote: »
    My answer for the WACC is as follows:
    Ordinary Shares 18.65%
    Pref Shares 5%
    Irredeemable Debentures 8%
    Redeemable Debentures 12.11%

    WACC 15.51%

    There seems to be differences in the figures for redeemable debentures
    My workings were as follows:

    Year cashflow discount(5%) PV Discount(10%) PV
    0 96.66 1 96.66 1 96.66
    1-2 (13(1-.20)) 1.859 (19.33) 1.735 (18.04)
    2 100 .907 (90.7) .826 (82.6)


    PV of (13.37) and (3.98)

    Kd = 5 + 13.37(5)/9.39

    Kd = 5 + 7.119

    Kd = 12.11%


    My workings for WACC are:

    2100(18.7%)/2100+240+400+290 + 240(5%)/3030 + 400(8%)/3030 + 290(12.11%)/3030


    =15.51%

    Anyone Agree/Disagree with this?

    Hi there, I re done my reedemable calculations and got 12.11%

    I now have 18.67%, 5%, 8% and 12.11% with an overall WACC of 15.56%.

    I used a dividend growth of 12% while most people seemed to have used 11.99%. I would say anything is the range of 15.51 to 15.56 is about right, the differences are down to rounding.


  • Closed Accounts Posts: 44 MAX72


    hawai09 wrote: »
    has anybody looked into either if the above yet?

    Had a look the sources of finance. Its a choice between debentures and the rights issue as the 70 million shares at market value does not raise the necessary funds. Its down to the gearing ratios etc and company policy. I suppose then its a matter of debt v equity advantages and disadvantages..... what does other people think?


  • Registered Users Posts: 513 ✭✭✭Onearmedbandit


    Jaysus lads thats a lot harder looking then last year. Lots of things that they could ask you on.

    Best of luck


  • Registered Users Posts: 64 ✭✭barrystealover


    eoin99 wrote: »
    I've calculated an updated WACC for each scenario:
    1. 14.21%
    2. 15.82%
    3. 15.86%

    Anyone else calculated these & got similar answers? ( I was working off 15.55% as my original WACC)

    On the theory side I suppose you could be asked the pro's/con's of each, issuing shares/increasing debt. Any other suggestions?


    For scenario 1(redeemable debentures in 2031) i used
    Disc 5% NPV disc 10% NPV
    yr0 100 1 100 1 100
    yr1-22 (6.4) 13.1630 (84.2432) 8.7715 (56.1376)
    yr 22 (100) .3418 ( 34.18) .1228 (12.28)

    totals
    (18.4232) 31.5824

    using this i got an irr of 6%
    and re doing WACC

    ke 18.66% €2100m 11.73%

    kp 5% €240m .36%

    kd irr 8% €400 .96%

    kd red 6% €600m 1.08%

    14.13%


    could some1 please tell me if this is right(might be off slightly) due to rounding.
    have i used the proper figures in yr 0 and yr 22??
    have i used the proper market value of €600m when recalculating the wacc(in the table above)


  • Registered Users Posts: 64 ✭✭barrystealover


    this is the calculations that i have done for the W.A.C.C. option 2(issue 70million ordinary shares at market value)?
    any1 any comments?


  • Closed Accounts Posts: 6 John_P_C


    What is everyone preparing for the section on Acquiring Rian Incorp in China?

    My take would be something on;
    Due Diligence
    interest only loan
    Translational risk

    Just not sure how to approach this section. Any help would be appreciated


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  • Closed Accounts Posts: 11 flashtash


    MAX72 wrote: »
    Had a look the sources of finance. Its a choice between debentures and the rights issue as the 70 million shares at market value does not raise the necessary funds. Its down to the gearing ratios etc and company policy. I suppose then its a matter of debt v equity advantages and disadvantages..... what does other people think?

    yeah, exactly. i'm working out that the others are raising far more than the 300mill required though. you the same or am i miles off?


  • Closed Accounts Posts: 17 BlackHouse


    s.m.c wrote: »
    My answer for the WACC is as follows:
    Ordinary Shares 18.65%
    Pref Shares 5%
    Irredeemable Debentures 8%
    Redeemable Debentures 12.11%

    WACC 15.51%

    There seems to be differences in the figures for redeemable debentures
    My workings were as follows:

    Year cashflow discount(5%) PV Discount(10%) PV
    0 96.66 1 96.66 1 96.66
    1-2 (13(1-.20)) 1.859 (19.33) 1.735 (18.04)
    2 100 .907 (90.7) .826 (82.6)


    PV of (13.37) and (3.98)

    Kd = 5 + 13.37(5)/9.39

    Kd = 5 + 7.119

    Kd = 12.11%


    My workings for WACC are:

    2100(18.7%)/2100+240+400+290 + 240(5%)/3030 + 400(8%)/3030 + 290(12.11%)/3030


    =15.51%

    Anyone Agree/Disagree with this?

    I agree with this, anyone else get the same?


  • Closed Accounts Posts: 6 John_P_C


    BlackHouse wrote: »
    I agree with this, anyone else get the same?
    i got 12.45% cost of capital for my Redemmable debentures and my WACC was 15.58% so pretty much the same as yours


  • Closed Accounts Posts: 17 BlackHouse


    below is mine :

    DetailsOrg costAdjustmentDescriptionRevisedMaterial CX4000 kg @ €24,000 = €6 per kg 24,000.00 - 34,000.00 Cost of €10k to dispose- 10,000.00

    Materials FG5000 kg @ €70,000 = €12 per kg 70,000.00 - 45,000.00 Replacement Value + Scrap 25,000.00 Materials NF10000 kg @ €80,000 80,000.00 90,000.00 Replacement Value 170,000.00 Skilled Labour200 hours 12,000.00 - 12,000.00 Idle if not used - Unskilled Labour400 hours 16,000.00 60,000.00 Opp cost forgone 76,000.00 Variable O/Head 8,000.00 4,000.00 Fixed + Var @ 20 per hour 12,000.00 Fixed O/Heads 15,000.00 3,000.00 Ignore allocation, include Insurance 18,000.00

    Contract Estimation 44,000.00 - 44,000.00 Sunk cost - Engineers Fees 40,000.00 - 15,000.00 Do not include 15k retainer 25,000.00 HQ Costs 20,000.00 - 20,000.00 Reallocation ignore - Totals 329,000.00 - 13,000.00 316,000.00 Income 300,000.00 300,000.00 - 29,000.00 - 13,000.00 - 16,000.00


  • Closed Accounts Posts: 3 ava 10


    For scenario 1(redeemable debentures in 2031) i used
    Disc 5% NPV disc 10% NPV
    yr0 100 1 100 1 100
    yr1-22 (6.4) 13.1630 (84.2432) 8.7715 (56.1376)
    yr 22 (100) .3418 ( 34.18) .1228 (12.28)

    totals
    (18.4232) 31.5824

    using this i got an irr of 6%
    and re doing WACC

    ke 18.66% €2100m 11.73%

    kp 5% €240m .36%

    kd irr 8% €400 .96%

    kd red 6% €600m 1.08%

    14.13%


    could some1 please tell me if this is right(might be off slightly) due to rounding.
    have i used the proper figures in yr 0 and yr 22??
    have i used the proper market value of €600m when recalculating the wacc(in the table above)


    got pretty much the same answer for wacc on debentures..just a bit confused tho with the year zero if its 2009 or 2010 and the market value of debentures nt sure if its 100 r has interest 2be subtracted etc..


  • Closed Accounts Posts: 44 MAX72


    flashtash wrote: »
    yeah, exactly. i'm working out that the others are raising far more than the 300mill required though. you the same or am i miles off?


    The debentures raise the exact amount. They raise 600million but would have to pay off the outstanding 300 million. The rights issue raises 336 million.


  • Closed Accounts Posts: 14 TMB


    For calculating the cost of the machine, what are the majority of people doing re:

    Material FG: Scrap 5000 V's Rep 25000
    Skilled Labour: Sunk Cost or 12000
    HQ Costs: Are only incurred if proposal is undertaken so should they not be included at 20000

    Appreciate any help thanks


  • Registered Users Posts: 5 accounts10


    i have just been working on the relevant costing section.. just wondering did anyone get a loss of 16,000?


  • Closed Accounts Posts: 44 MAX72


    accounts10 wrote: »
    i have just been working on the relevant costing section.. just wondering did anyone get a loss of 16,000?

    Just put up your list of figures and people can see what you have and have not included.


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  • Closed Accounts Posts: 91 ✭✭lala1987


    SOS just logged on and being seen yer all doing calculations etc. :eek:any pin pointers where to start....tbh any help at all id really appreciate it:o


  • Closed Accounts Posts: 17 BlackHouse


    I got the following:

    Material CX = +10,000
    Material FG = -25,000 Replacement cost agreed
    Material NF = -170,000 Replacement cost agreed
    Skilled Labout = 0 As it is idle if project does not go ahead agreed
    Unskilled Labour = 76,000 (400*40 + 400*150) agreed
    Variable O/H's 12,000 Relevant as they are incremental agreed
    Fixed OH's = 18,000 stepped cost agreed
    Estimation costs = 0 Sunk cost agreed
    Engineering fees = 25,000 agreed
    Head Office = 0[/quote] agreed

    You have the 10k in the wrong way around, loos shoul dbe 16k not 36k.


  • Closed Accounts Posts: 17 BlackHouse


    accounts10 wrote: »
    i have just been working on the relevant costing section.. just wondering did anyone get a loss of 16,000?


    I got that, have posted my workings.


  • Closed Accounts Posts: 44 MAX72


    BlackHouse wrote: »
    I got the following:

    Material CX = +10,000
    Material FG = -25,000 Replacement cost agreed
    Material NF = -170,000 Replacement cost agreed
    Skilled Labout = 0 As it is idle if project does not go ahead agreed
    Unskilled Labour = 76,000 (400*40 + 400*150) agreed
    Variable O/H's 12,000 Relevant as they are incremental agreed
    Fixed OH's = 18,000 stepped cost agreed
    Estimation costs = 0 Sunk cost agreed
    Engineering fees = 25,000 agreed
    Head Office = 0
    agreed

    You have the 10k in the wrong way around, loos shoul dbe 16k not 36k.[/quote]

    The only one I have a question mark on is the unskilled labour. I agree with the opportunity cost of €60k but would you still charge the cost of the unskilled labour. If the project does not go ahead, will that cost not be incurred by the other project. Just like the skilled labour, the unskilled labour cost will be incurred whether this project goes ahead or not. I am at a break even situation!!


  • Closed Accounts Posts: 17 BlackHouse


    MAX72 wrote: »
    agreed

    You have the 10k in the wrong way around, loos shoul dbe 16k not 36k.

    The only one I have a question mark on is the unskilled labour. I agree with the opportunity cost of €60k but would you still charge the cost of the unskilled labour. If the project does not go ahead, will that cost not be incurred by the other project. Just like the skilled labour, the unskilled labour cost will be incurred whether this project goes ahead or not. I am at a break even situation!![/quote]

    So you are saying that unskilled of €40 per hour would be used for the other job if we don't go ahead, therefore is a cost that the company will incurr anway?
    so its only the contribution forgone of 150 per hour that needs to be included???


  • Closed Accounts Posts: 44 MAX72


    BlackHouse wrote: »
    The only one I have a question mark on is the unskilled labour. I agree with the opportunity cost of €60k but would you still charge the cost of the unskilled labour. If the project does not go ahead, will that cost not be incurred by the other project. Just like the skilled labour, the unskilled labour cost will be incurred whether this project goes ahead or not. I am at a break even situation!!

    So you are saying that unskilled of €40 per hour would be used for the other job if we don't go ahead, therefore is a cost that the company will incurr anway?
    so its only the contribution forgone of 150 per hour that needs to be included???[/quote]

    Thats how I was reading it but now I am not so sure!!..... everyone here seems to be including the €16k unskilled labour cost. Will have to check it out before the 16th!!


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  • Closed Accounts Posts: 2 Will Mckenzie


    susie-q wrote: »
    Looking back on my college notes I have relevant cost of materials will be the greater of alternative use value or the net realisable value. So for the case of FG would this not be the greater of scrap value €1 and replacement value €5.?
    i.e. 5000 kg x €5 = €25000??

    Is the replacement cost not gone already? They could be trying to catch us out with wording?


  • Closed Accounts Posts: 2 Will Mckenzie


    MAX72 wrote: »
    So you are saying that unskilled of €40 per hour would be used for the other job if we don't go ahead, therefore is a cost that the company will incurr anway?
    so its only the contribution forgone of 150 per hour that needs to be included???

    Thats how I was reading it but now I am not so sure!!..... everyone here seems to be including the €16k unskilled labour cost. Will have to check it out before the 16th!![/quote]

    I think it is only the 150 per hour needed. The 40 per hour would be used anyway. Thats how I read it anyway.

    This would mean unskilled labour is 60,000


  • Registered Users Posts: 5 accounts10


    MAX72 wrote: »
    So you are saying that unskilled of €40 per hour would be used for the other job if we don't go ahead, therefore is a cost that the company will incurr anway?
    so its only the contribution forgone of 150 per hour that needs to be included???

    Thats how I was reading it but now I am not so sure!!..... everyone here seems to be including the €16k unskilled labour cost. Will have to check it out before the 16th!![/quote]

    Yeah i was unsure about including the unskilled labour as well. i had originally only included the contribution forgone. but then saw everyone here saying they were including it.
    also, i wasnt sure about the variable overhead cost. would you include the variable overhead element for skilled labour (200 hrs x 20) as they have idle time so would it not be incurred regardless of whether you take on the job or not??


  • Closed Accounts Posts: 11 flashtash


    MAX72 wrote: »
    The debentures raise the exact amount. They raise 600million but would have to pay off the outstanding 300 million. The rights issue raises 336 million.

    yeah, i agree with that


  • Closed Accounts Posts: 44 MAX72


    MAX72 wrote: »
    So you are saying that unskilled of €40 per hour would be used for the other job if we don't go ahead, therefore is a cost that the company will incurr anway?
    so its only the contribution forgone of 150 per hour that needs to be included???

    Thats how I was reading it but now I am not so sure!!..... everyone here seems to be including the €16k unskilled labour cost. Will have to check it out before the 16th!![/quote]


    Checked this out last night. The €16k labour charge is also included giving a cost of €76k. Overall loss of €16k.


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