Reading 37:- Calculating value of Intangibles

CFA Level II Equities
#1

Hi,

I am confused with the calculation of value of intangibles when using the EEM. In practice problem 5 which asks to value intangibles with EEM, the RI for intangibles is forecasted for future using growth rate before captializing (discount for intangibles minus growth).

In problem 15 the RI for intagible is captilaized without forecasting and the solution mentiond using CCM even though it has not been asked in the question. I can understand that for problem 11 it has been explicity asked to value using CCM, but problem 15 mentions only EEM.

Any possible explanation or should be posted for errata?

cheers.

#2

Well I must have been sleeping and forgot the age old adage RTFQ.

in the above scenarios, Q11 and 15 were referring to data that was already a year ahead forecast while problem 4 states current values.

It’s clear why I could not pass in 2012. :wink:

cheers.

#3

Thanks for answering your own question!

I was in the same boat as you until I read your post. Looks like I should have been reading the question instead of reading the CFA errata!

That’s really tricky! I guess it’s really important to establish what the base year is right off the bat and always look back to that before answering the questions.