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In a share buyback scheme, the residual DER of a company is 2:1 if outstanding FCDs are not considered as debt

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In a share buyback scheme, the residual DER of a company is 2:1 if outstanding FCDs are not considered as debt. If the FCDs are included, the DER amounts to 2.8:1. The company’s CFO and the i-banker are confused as to which is the right approach. How do you determine?

(a) FCDs to be included         (b) FCDs to be excluded