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ACCA F9 lectures ACCA F9 notes
April 20, 2016 at 6:53 am
Chapter 12 example 1, i realise that the working at he back could be wrong.It seems as though that the discounting factor was worked on the basis of the coupon rate . However the investors` expected return is 10%.The example also states this factor but somehow discounts at 8%.That is part 1 -market value of the bond.
John Moffat says
April 20, 2016 at 8:16 am
You are correct – the wrong discount factors have appeared.
Thank you for noticing – I will have it corrected.
April 21, 2016 at 7:00 am
thank always John
April 21, 2016 at 7:24 am
You are welcome 🙂
December 1, 2015 at 6:35 pm
I was attempting part (b) of the example and had no problem in calculating the current market value but could not do part (ii) in which we had to calculate the conversion premium. Based on the knowledge that you have given us so far, was I in a position to attempt part (ii) or the required knowledge is given in the later lectures?
December 2, 2015 at 7:12 am
It is in later lectures 🙂
December 2, 2015 at 3:55 pm
December 2, 2015 at 5:24 pm
November 7, 2015 at 7:23 am
Dear John, I would like to understand the difference between par and nominal.
Can you please explain that?
November 7, 2015 at 3:04 pm
Par value and nominal value both mean the same thing.
September 6, 2015 at 8:29 pm
is there a lecture that completes the answering of example 1 Part B) would really like to know the method in solving the question.
Thank you once again
May 10, 2015 at 11:49 am
Thanks Jef, thanks Zohaib too. I had recognised that the d.f for 10% used in the answers was wrong. Almost raised the querry until I saw your comments. In my computation I used the correct ones for 10%, This is a sign that I am learning. Thanks all.
May 10, 2015 at 4:13 pm
Who is Jef?? 🙂
August 27, 2015 at 7:50 am
Dear sir in example DF is 10% but in solution thyou give at the end you use 8% please chek it ?
August 27, 2015 at 8:39 am
If you look further down the comments you will see that it is an error – the discounting should be at 10%
March 15, 2015 at 9:15 am
The sound quality of this lecture is poor compared with the others.
November 18, 2014 at 7:34 am
there’s no part B?
November 18, 2014 at 8:38 am
Do you mean lecture part (b) – in which case there is; or do you mean that the lecture doesn’t contain part (b) of the answer?
If the latter then you are correct. However there is of course an answer in the course notes as always.
February 3, 2014 at 7:30 pm
Is there a technical why the lectures are always freezing.I use them to study F9 and are very good but they keeping stopping. Are your a where of the problem? Thanks
February 3, 2014 at 9:08 pm
There is no problem with the lectures.
The problem is almost certainly the internet connection at your end. If you go to the support page you will find advice on what to do – the link is just below the lecture.
November 29, 2013 at 12:37 am
what does $90% means for debenture.. in practice question example no 12.
how value come to 78.
November 29, 2013 at 8:10 am
$90% means that the market value is $90 for every $100 nominal.
In the calculation of cost of debt, we need the ex int market value (the MV immediately after interest has been paid). In the question it says that the MV is $90 but that interest is about to be paid (so it is cum int). The interest about to be paid is $12, and so the ex int MV is $90 – $12 = $78
November 12, 2013 at 10:05 am
Hi John, would we ever be asked to factor in a debenture redemption into our NPV calculations??
November 12, 2013 at 10:46 am
No – not in the calculation of a project NPV (because it is accounted for in the calculation of the weighted average cost of capital )
November 10, 2013 at 6:58 am
Hi,John.When the company will repay the bond?At the beginning of the year or the end of the year? THX !
November 10, 2013 at 8:24 am
Unless you are told otherwise, you assume it is repaid at the end of the year.
November 10, 2013 at 8:40 am
November 10, 2013 at 8:48 am
No problem 🙂
October 21, 2013 at 9:42 pm
where can i find the part b of example 1??
September 4, 2013 at 3:35 am
What if a debenture holder is old and wants to retire from business activities. Ie. he just wants his cash and out? Or would you still take the shares if higher than cash and re-sell instead of taking cash which is lower?
September 12, 2013 at 6:30 pm
I suppose anyone would take the shares, because it is not like he is gonna be stuck with shares forever, he can directly sell them on the stock exchange, so he will have his cash just like he wanted plus some extra!
April 30, 2013 at 11:13 am
Thanks a lot sir for your response, I will wait for the lecture and pray that you get time for it :)…As these lectures are very useful…
April 27, 2013 at 1:07 pm
Sir, kindly elaborate it a bit, as we have to discount the receipts by the Investor’s required rate of return which in the specific question is 10% but the calculations has been done by using the coupon rate which is 8%. the annuity factor for 10% for 3 years is 2.487 but in the question it is 2.577 and Discount factor varies too…
April 28, 2013 at 8:42 am
I am sorry – it is an error.
The discounting should be done at 10%.
I will re-record the lecture.
April 29, 2013 at 9:06 pm
Thanks a lot sir…May you arrange a lecture regarding Business valuations as the content of theory is a bit tough,,,
April 29, 2013 at 9:09 pm
i am mainly talking about PE ratio…
April 30, 2013 at 8:37 am
I will record a lecture, but I am afraid that I am unlikely to have the time to do it before the June exams.
March 14, 2013 at 8:06 pm
Hi I have worked through part b and am slightly confused by the answer to part ii, the required cost of capital is 10% I had assumed that the df factor would be 10%.
The answer uses the 8% df rates but states 10%, is this because the conversion premium is the current mv of the shares less the current coversion value, so the current df is 8% the desired df is 10%.
April 28, 2013 at 4:41 am
i have the same query…
July 14, 2012 at 6:35 am
Why I can not download this Video?
July 14, 2012 at 10:57 am
You can only watch lectures on line, they are not downloadable.
May 19, 2012 at 9:54 pm
Because shares have a cash value.
May 1, 2012 at 1:02 pm
its a convertible DEBT – How come they have the option of taking cash or shares and not considering that as debt( repay at the end of term)?
July 13, 2012 at 12:39 pm
@yogeeta75, I think that the word ‘debt’ is confusing you. In this context, debt is ‘debt borrowing’. The company has borrowed money.
May 1, 2012 at 12:55 pm
from the companies point of view – is this a source of finance?how?
so at the end of the term the company does not repay the debentures but instead takes shares in the company(where the debenture was taken)?
@yogeeta75, The word ‘debt’ is confusing you. In this context, debt is ‘get borrowing’. The company has borrowed money.
July 13, 2012 at 12:41 pm
@johnmoffat, sorry – ‘get borrowing’ should read ‘debt borrowing’!
April 23, 2012 at 8:15 pm
As the lecture says, part (b) is left until later because it needs knowledge that has not yet been covered.
However you can see the answer to it at the back of the course notes.
April 23, 2012 at 6:18 pm
what abt part b
June 12, 2012 at 6:35 pm
@m23ahmuda, right, i was also looking fwd for an explanation for part b pls. Thanks!
December 3, 2012 at 11:25 am
Could you pls also include the explanation for part b of the excercise?
December 3, 2012 at 2:50 pm
@annchen, I am puzzled which part of the answer you are not clear about.
in part (b)(i), as always, the market value of debt is the present value of expected receipts discounted at the investors required rate of return. Having calculated the expected share price, it is clear that the investors will expect to convert in 3 years time.
Part (b)(ii) is explained perfectly in the answer and I cannot say anything extra to what is there!
December 3, 2012 at 6:43 pm
@johnmoffat, ok, i got it now; i had mixed sth up; thanks for the reply 🙂
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